FHA To Help Subprime Borrowers
Eric Rosengren, president of the Federal Reserve Bank of Boston recently made the statement that many borrowers with subprime mortgages, having reasonably good credit, may be able to refinance into a less costly mortgage by taking advantage of government programs. He noted that 55% of subprime adjustable-rate mortgages, where the owner occupied the home, hadn’t missed a mortgage payment in the past year, translating to about 1.2 million borrowers. Those homeowners meet the credit standards required for FHA [Federal Housing Administration] guarantees. FHA is a division of the U.S. Department of Housing and Urban Development that insures loans originated by banks and other companies. FHA was designed to provide insurance for first-time homebuyers and low- and middle-income borrowers.
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