HOPE FOR HOMEOWNERS PROGRAM - TO HELP MORE STRUGGLING FAMILIES KEEP THEIR HOMES

The Bush Administration unveiled additional mortgage assistance for homeowners at risk of foreclosure with The HOPE for Homeowners program, designed to help refinance mortgages for borrowers who are having difficulty making their payments, but can afford a new loan insured by HUD's Federal Housing Administration (FHA).

"For families struggling to keep up with their mortgage payments, this program will be another resource to refinance into a loan they can afford," said HUD Secretary Steve Preston. "FHA remains a safe and affordable alternative to the high-priced mortgage loans that threaten homeowners' ability to retain their homes. We strongly encourage borrowers to work with their lenders to determine if HOPE for Homeowners is the right program for them."

Unfortunately, THIS PROGRAM IS NOT WHAT PEOPLE THINK it is. It has been called "HopeLESS for Homeowners" by many in the mortgage industry, as the combination of getting your existing lender to cooperate, and a new lender willing to take on the previous lenders "problem" loan will result in few of these actually being done. While any FHA lender is technically able to offer the loan, very few lenders as of today have actually agreed to provide it! Lenders will most likely choose to modify an existing customers loan rather than agreed to take less today under the requirements of Hope for Homeowners.

Just 111 Hope For Homeowner Applications were processed for the ENTIRE country the first month of the program!

The HOPE for Homeowners program was authorized by the Economic and Housing Recovery Act of 2008. Since the President signed this vital legislation into law on July 30, 2008, the HOPE for Homeowners Board of Directors has worked diligently to develop and implement the program as directed by Congress. The Board was charged with establishing underwriting standards to ensure borrowers, after any write-down in principal, have a reasonable ability to repay their new FHA-insured mortgage.

The HOPE for Homeowners program began Oct. 1, 2008 and ends September 30, 2011. The program will offer 30-year fixed rate mortgages - so the borrower's last payment will be the same as the first payment.

We are an Official HUD Certified (Department of Housing and Urban Development) FHA Provider for Minnesota and Wisconsin. 

How the HOPE for Homeowners program works

HOPE for Homeowners also includes the following provisions:

• The loan amount may not exceed a maximum of $550,440.
  
   
• The new mortgage will be no more than 90 percent of the new appraised value including any financed Upfront Mortgage Insurance Premium.
  
   
• The Upfront Mortgage Insurance Premium is 3 percent and the Annual Mortgage Insurance Premium is 1.5 percent.
  
   
• The holders of existing mortgage liens must waive all prepayment penalties and late payment fees.
  
   
• The existing first mortgage must accept the proceeds of the HOPE for Homeowners loan as full settlement of all outstanding indebtedness.
  
   
• Existing subordinate lenders must release their outstanding mortgage liens.
  
   
• Standard FHA policy regarding closing costs applies, and they may be:
  • Financed into the new loan provided the value of the mortgage (including the Upfront Mortgage Insurance Premium) does not exceed 90 percent of the new appraised value of the home.
  • Paid from the borrowers' own assets.
  • Paid by the servicing lender or third party (e.g., federal, state, or local program).
  • Paid by the originating lender through premium pricing.
  
   
• The borrower must agree to share with FHA both the equity created at the beginning of this new mortgage and any future appreciation in the value of the home.
  
   
• The borrower cannot take out a second mortgage for the first five years of the loan, except under certain circumstances for emergency repairs.

The lender will disclose to the homeowner the benefits of the program including home retention, a new affordable mortgage based on the current appraised value, and 10 percent equity. The lender will also explain the prohibition against new junior liens against the property unless directly related to property maintenance, and a minimum of 50 percent equity and appreciation sharing with the Federal government.

The costs to the homeowner include the upfront and annual insurance premiums, as well as a share of the equity created by the write-down associated with the HOPE for Homeowners mortgage and any future appreciation in the value of the home. At settlement, subordinate lien holders will receive a certificate that evidences their interest as an obligation backed by HUD, with payment conditional on the value of HUD's appreciation share.

If the home is sold or refinanced, the homeowner will share the equity with FHA on a sliding scale ranging from a 100 percent FHA share after the first year to a minimum of 50 percent after five years. The lien holder that previously held the highest priority will receive payment up to a proportion of its original interest, not to exceed the amount of available appreciation. This type of delayed payoff will take place until all prior lien holders are satisfied or the amount of available appreciation is exhausted. All remaining appreciation is remitted to FHA.

The HOPE for Homeowners Board of Directors includes HUD Secretary Steve Preston, Treasury Secretary Henry Paulson, Federal Reserve Board Chairman Ben Bernanke, and FDIC Chairman Sheila Bair. They have named the following people to serve on the board as their designees: FHA Commissioner and Chairman of the Board Brian Montgomery, Federal Reserve Board Governor Elizabeth Duke, Treasury Assistant Secretary for Economic Policy Phillip Swagel, and Federal Deposit Insurance Corporation Director Tom Curry.

Read more about HOPE for Homeowners at www.hud.gov/hopeforhomeowners.