THIS program is only available to owner occupants and will offer 30-year fixed rate mortgages, banks will have to write down the existing mortgage to 90 percent of the new appraised value of the home.
Here are the borrowers who are eligible:
* The home is their primary residence, and they have no ownership interest in any other residential property, such as second homes.
* Their existing mortgage was originated on or before January 1, 2008, and they have made at least six payments
* They are not able to pay their existing mortgage without help, in other words they have to qualify for hardship.
* As of March 2008, their total monthly mortgage payments due were more than 31 percent of their gross monthly income.
* They certify that they have not been convicted of fraud in the past 10 years, intentionally defaulted on debts, and did not knowingly or willingly provide material false information to obtain their existing mortgage(s).
How the HOPE for HOMEOWNERS program works:
Hope for Homeowners will add to HUD’s existing efforts to make FHA refinancing available to homeowners who need it the most. One year ago, FHA secure program was created and it has helped more than 360,000.00 families keep their homes by refinancing with FHA.
The Board expects that the primary way homewowners will participate in the program is by working with their current lenders. Hope will serve as another loss mitigation tool available to distressed borrowers.
Hope also includes the following provisions:
* The loan amount may not exceed a maximum of $550,440.00
* The new mortgage will be no more than 90% of the new appraisal value including any financed Upfront Mortgage Insurnce Premium.
* The upfront Mortgage Insurance Premium is 3% and the Annual Mortgage Insurance Premium is 1.5%.
* 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 ( second lender/loan) must release their outstanding mortgage liens.
* Standard FHA policy regarding closing applies.
* 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.
There will be benefits for FHA to step in and help these homeowners call HUD 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% FHA share after the first year to a minimum of 50% 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.
Does this program really helpful to you? It sounds like you will be renting from FHA, I will try and get more information on this. I really appreciate what they are doing as far as trying to help homeowners but if you have pay back everyone with the equity that you might have made in the next 10 years and would have paid a huge amount of money every month for your mortgage payments, I would rethink and do my proper math to make sure its worth it for me.
I have advise many callers that your priority now is to understand how much you owe on the mortgage now how much you are paying. Because if you owe $500,000.00 on a loan that is worth only around $375,000 when you are going to pay the $500K off, even if you get this program from FHA. You would have to pay an Annual Premium plus a monthly MIP ( Mortgage Insurance Premium) and then once the value goes back up you then have to share the equity and pay of the previous lien holders? Wait a minute, this sounds like a better deal for FHA and not you.
Let get and share more information. Now, I know this is not easy to get and I understand why but will continue to monitor these options for you to have if you get into a financial crisis.
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Call Ken Go of 1st Innovative Finance if you have any questions; remember no such thing as a stupid question. (562) 697–7028 or write to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
( Published November 19, 2008 p. B4 LAMDWK )
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