For months HUD has been touting the FHASecure in a way that made little sense -- until now.

In February, for example, then-HUD Secretary Alphonso Jackson said that "FHASecure has helped more than 100,000 families stay in their homes. Homeowners are cutting their monthly mortgage payments by an average of $400 a month compared to their exotic subprime loans. They no longer have anxiety about finding foreclosure notices in their mailboxes, thanks to the safe mortgage alternative that FHASecure offers."

And just a few days ago HUD announced that "since September 2007, FHASecure has helped more than 180,000 homeowners refinance their loans and avoid foreclosure."

This is great stuff except for one problem: Assuming we all understand the idea of "foreclosure," the HUD claims are untrue.

What's the truth? According to the most-recent official numbers from HUD, since September just 1,987 delinquent conventional borrowers have been able to refinance with an FHA mortgage. Why has HUD made such exaggerated claims regarding the FHASecure program? One obvious reason is that it's good politics: Big numbers suggest that the government is trying to help those facing foreclosure.

But now a second reason has come out: A few days ago HUD announced that borrowers who refinance under the FHASecure program will face risk-based insurance premiums.

Instead of one premium for all borrowers, with risk-based premiums those with poor credit pay more for insurance than those with good credit.

This sounds reasonable, but as the Government Accountability Office reported in July, with risk-based pricing 43 percent of current FHA borrowers would pay the same or less under risk-based pricing, 37 percent would pay more, and 20 percent would not even qualify for FHA insurance.

Since it started in the 1930s the FHA program has had one set of insurance rates for everyone. Now HUD wants a back-door way to raise billions of dollars in excess insurance charges and it effectively wants to cut off one of every five FHASecure borrowers. At a time when the nation faces a massive foreclosure problem, there are surely better ways to help homeowners than to grab for higher mortgage insurance fees.

Published: May 14, 2008

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .