FHA-approved lenders offer subprime antidote

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Countrywide Financial Corp. announced its intention this week to help 82,000 subprime borrowers facing higher payments to stay in their homes.

But, the company is not the only financial institution promoting FHA fixed-rate refinanced or restructured loans to borrowers overwhelmed by high-risk escalating adjustable rate mortgages.

The HUD-sponsored program, launched Sept. 5 with the support of Wall Street investors, has been made available to all FHA-approved lenders.

Locally, Colorado Online Mortgage, a Colorado Springs-based mortgage company and loan originator affiliated with Adams Bank and Trust, also provides FHA refinancing and restructuring to borrowers, said President Hutch Hutchison.

“We didn’t do many subprime loans – maybe 4 percent of the total 500 loans we closed in 2006,” Hutchinson said. And, so far only a handful of borrowers have contacted the mortgage company for help.

Cristie Drumm, Wells Fargo’s regional vice president for Colorado, Montana and Wyoming said the vast majority – 92 percent – of mortgages originated in the past year by Wells Fargo Home Mortgage were prime.

Historically the FHA-approved lender’s foreclosure rates have been below industry averages, as was the case in the 2006 year-end rankings which appeared in Inside Mortgage Finance. Wells Fargo’s foreclosure rate was .49 percent compared to an industry average of 0.67 percent

Drumm cited the company’s outreach to homeowners who have an ARM scheduled to reset.

“We contact them six months prior to the reset date and talk with them individually. We can offer assistance through temporary suspension of payments, developing a repayment plan for the past-due amount, loan modification and more,” she said.

FHA fixed-rate loan options are available to three groups of borrowers: on-time payers who face overwhelming adjustable rate increases, subprime homeowners who are unable to refinance their escalating loans and homeowners who, while delinquent as a result of adjusting mortgages, were making on-time payments before their two or three year low fixed-rate introductory period ended.

Hutchison said he expects the mortgage crisis and resulting new home sales slump to take another year to subside.