If you've been tricked by teaser rates that have expired and left you with a mortgage payment that you can't afford, FHASecure might have your solution.

There may be some chicken soup for thousands of ailing mortgage borrowers in the form of FHASecure. The affliction is the teaser rate bug, which has lured households throughout the country into funding mortgage loans that were likely to see extreme payment increases. As those increases are rolling into effect, borrowers are reeling from the symptoms of payment shock and tight cash flow.

Government to the rescue

FHASecure is a federal program designed specifically to help homeowners who've experienced huge increases in their minimum payment amounts. These increases are generally related to the expiration of low teaser rates that enticed borrowers into loans that they couldn't afford over the long term.

In the past, FHA underwriting guidelines haven't been friendly to delinquent mortgage borrowers in need of refinanced mortgages. However, FHASecure takes a different approach. Under the program, delinquent homeowners can qualify-as long as they were current on their payments for the six months preceding the interest rate reset. This qualification ensures that resources go towards assisting borrowers who were duped by teaser rates, rather than those who were simply irresponsible. The rate reset must occur between June 2005 and December 2009. Qualified homeowners can include in the new loan balance up to six months of past-due mortgage payments, plus back taxes and insurance.

Insurance payments

FHASecure mortgages are made by approved FHA lenders. They agree to the governmental agency's relaxed underwriting standards, because all these loans carry FHA mortgage insurance. Borrowers will have to pay upfront and periodic mortgage insurance premiums. But on FHASecure loans, the premiums can be adjusted on a case-by-case basis. This means that lower risk borrowers may qualify for reduced insurance premiums. Prorated amounts for property taxes and homeowners insurance will also be rolled into the monthly payment. There are no prepayment penalties, however, so the borrower can refinance in the future, if it makes sense to do so.

Other qualifications

An FHASecure loan may not be the right solution when the home's value has dropped significantly, because it's required that the homeowner have at least 3 percent equity in the home. If the loan balance, including past-due payments and charges, is in excess of 97 percent of the home's value, the homeowner will need to contribute cash to make up the difference.

FHASecure also won't help investors. Only borrowers who live in the mortgaged property qualify.

The federal government estimates that about 240,000 at-risk mortgage borrowers could benefit from FHASecure. This is a good start towards wiping out the teaser bug entirely. As an added benefit, keeping these homes out of foreclosure should relieve some of the negative pressure on the real estate market, as well. Homeowners interested in learning more about this program should consult with an experienced, FHA-approved lender as soon as possible.