[JPaterson]

BUSH ADMINISTRATION ANNOUNCES FLEXIBILITY
FOR “HOPE FOR HOMEOWNERS” PROGRAM
Changes will allow more struggling families to use the program and keep their homes


WASHINGTON – U.S. Housing and Urban Development Secretary Steve Preston today announced that the HOPE for Homeowners (H4H) Board of Directors has approved changes to the program to help more distressed borrowers refinance into affordable, government-back mortgages. The changes will reduce the program costs for consumers and lenders alike while also expanding eligibility by driving down the borrower’s monthly mortgage payments.

“Clearly, meaningful changes were needed. These modifications should increase lender participation and help more families who are having difficulty paying their existing mortgages, but can afford a new affordable loan insured by HUD’s Federal Housing Administration,” said Preston.

By taking full advantage of the new authority provided under the Emergency Economic Stabilization Act (EESA) of 2008, HOPE for Homeowners will provide additional mortgage assistance to struggling homeowners.

Modifications to HOPE for Homeowners include:
· Increasing the loan to value ratio (LTV) to 96.5 percent for some H4H loans;
· Simplifying the process to remove subordinate liens by permitting upfront payments to lienholders; and
· Allowing lenders to extend mortgage terms from 30 to 40 years.

“These changes will further encourage lenders to take a hard look at this program before heading down the path to foreclosure and will provide families with another resource to refinance into a loan they can afford,” said FHA Commissioner Brian D. Montgomery. “HOPE for Homeowners will continue to serve as another loss mitigation tool that can be used to help families keep their homes.”

HOPE for Homeowners will continue to only offer affordable, government-insured fixed rate mortgages. Further, this program will maintain FHA's long-standing requirement that new loans be based on a family's long-term ability to repay the mortgage. Only owner-occupants are eligible for FHA-insured mortgages.


BACKGROUND

Increasing the Loan-to-Value and Adjusting Debt-to-Income Ratios

The program will increase the loan-to-value ratio (LTV) on H4H loans to 96.5 percent for borrowers whose mortgage payments represent no more than 31 percent of their monthly gross income and household debt no more than 43 percent. This change will expand the number of eligible borrowers. Raising the loan-to-value ratio reduces the gap between the existing loan balances and the new H4H loan and decrease losses to the existing primary lienholders. Alternatively, the program will continue to offer borrowers with higher debt loads a 90 percent loan-to-value ratio on their H4H loans. This LTV ratio will include borrowers with debt-to-income ratios as high as 38 and 50 percent. In conjunction with the LTV change, H4H will eliminate the trial modification that was previously required. This measure was too complicated and required delicate negotiations among the existing lienholders, the new H4H lender, and the borrower.

Immediate Payments to Subordinate Lienholders

H4H will offer subordinate lienholders an immediate payment in exchange for releasing their liens, to permit more borrowers access to the program. Previously, subordinate lienholders who released their liens were only eligible to receive a small recovery payment when the home owned by the H4H borrower was sold. Given the amount of time that would pass between the creation of the H4H and the ultimate sale of the home, as well as the tremendous market uncertainties, subordinate lienholders were not guaranteed any return at all. To address this problem, the subordinate lienholders may now receive an immediate payment at the time the H4H loan is originated.

Extending Loan Terms from 30 to 40 years

To assure that borrowers are put into the most affordable monthly payment possible, HOPE for Homeowners will permit lenders to extend the mortgage term from 30 to 40 years. For borrowers with very high mortgage and household debt loads, extending out the amortization period may reduce their monthly payments enough to make it possible for them to qualify for this rescue product and save their homes.

Consistent with statutory and regulatory requirements, borrowers must continue to meet the following criteria:

· Their mortgage must have originated on or before January 1, 2008.

· They cannot afford their current loan.

· They must have made a minimum of six full payments on their existing first mortgage and did not intentionally miss mortgage payments.

· The loan amount may not exceed a maximum of $550,440.

· 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.

· They do not own a second home.

· They did not knowingly or willfully provide false information to obtain the existing mortgage, and they have not been convicted of fraud in the last 10 years.

· They must follow FHA's long-standing and strict policy of fully documented income and employment.

The HOPE for Homeowners program was authorized by the Housing and Economic Recovery Act of 2008. A Board of Directors 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 program began October 1, 2008, and will end September 30, 2011.

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.

[JPaterson]

List of Lenders Who Are Participating in the HOPE for Homeowners (H4H) Program


NOTE: Homeowners, contact your existing lender and/or a new lender to discuss how you may qualify for the H4H program.

The lenders listed below have indicated an interest in refinancing loans under the HOPE for Homeowners program. When contacting any of the lenders listed below, you are strongly encouraged to contact your servicing lender and any subordinate lien holders since their participation is vital for you to refinance into a HOPE for Homeowners mortgage. It is important to remember that the HOPE for Homeowners program is voluntary and your servicing lender may offer different solutions for avoiding foreclosure.

When contacting any lender on this list, please use the contact information provided. Do not give anyone money or pay any fees until you have spoken with your existing lender and know it is participating in the HOPE for Homeowners Program.

If you are experiencing difficulty in communicating with your current servicing lender and/or subordinate lien holders, you may wish to contact a housing counseling agency to ask for advice and assistance in reaching a mutually agreeable solution for avoiding foreclosure.

To view the list of lenders who are participating in the HOPE for Homeowners program click on the link below. Your browser will open a PDF document.


The H4H Lender List was updated on January 5, 2009. We will refresh the list on most Fridays.


LIST OF H4H PARTICIPATING LENDERS

[JPaterson]

HOPE FOR HOMEOWNERS
FREQUENTLY ASKED QUESTIONS FOR CONSUMERS

What is the HOPE for Homeowners Program (H4H)?
This new program, created by Congress, is intended to help borrowers at risk of default andforeclosure refinance into more affordable loans.

How can the H4H program help me?
If you are having trouble making your mortgage payments, this program may allow you to refinance your loan into a new 30- or 40-year fixed rate loan with lower payments.

Do I have to pay anything to apply?
There will be closing costs associated with HOPE for Homeowners loans; however, they may not be required to be paid out of pocket by the borrower. Please consult your lender or a HUDapproved Housing Counselor for more details. To find a FHA-approved lender or HUD-approved Housing Counselor, please go to fha dot gov.

How long will the process take?
Processing time will vary, but usually takes approximately 60 days. Please consult your lender when you apply.

What information do I need to apply?
Your lender is in the best position to answer this question based on your specific situation, but at a minimum you will need evidence of your income and assets, as well as your current mortgage information.

How long is the H4H program available?
The program began on October 1, 2008 and will end on September 30, 2011.

What interest rate will I receive?
The interest rate for the new H4H loan will be provided by the lender and is based on current market rates.

I don’t want another adjustable rate mortgage. Will this interest rate be fixed or adjustable?
All HOPE for Homeowners loans are 30- or 40-year FIXED RATE mortgages insured by the
Federal Housing Administration (FHA).

I contacted my lender and they are not interested in participating in this program. Can I
apply with HUD?
HUD/FHA does not accept loan applications or lend money directly. Contact your existing lender or another FHA-approved lender to see if they are participating in the H4H program. Like all FHA programs, you can only apply through a participating lender. You may also wish to contact a HUDapproved housing counselor to learn more about your options. HOPE for Homeowners is a voluntary program for both borrowers and existing lenders. In order to complete a HOPE for Homeowners loan, however, your lender must agree to accept the proceeds of the new loan as payment in full. For a list of participating lenders and counselors please go to fha dot gov.

Eligibility questions
My lender has started foreclosure proceedings. Can I still apply for H4H?
Yes, however, time is of the essence.

Is there an income restriction?
No, but you will need to demonstrate that you have sufficient, steady income to make the new H4H mortgage payments.

I recently filed for bankruptcy. Am I still able to apply for H4H?
Yes, borrowers in bankruptcy may participate; however, you will want to consult with the person handling your bankruptcy.

My lender has already foreclosed on my home. Can I still apply for H4H?
It may be possible depending on which stage of the foreclosure process you are in. You should talk to your lender immediately for more detailed information.

I have a first and second mortgage on my home. Can I still apply for H4H?
Yes, however, all your existing lenders must agree to release the liens against your home.

I am current on my mortgage. Can I apply for H4H?
Yes.

Lender related questions
Can you recommend a lender?
HUD does not recommend lenders; however, a list of participating lenders is located on our website at fha dot gov. In the section marked “At your service,” please click on the link “Find a HUD approved Lender in your area.”

I can’t reach my lender and I would like to apply. What should I do?
You may contact any participating lender to apply. For a list of HUD-approved lenders, please go to our website at fha dot gov. In the section marked “At your service,” please click on the link “Find a HUD approved Lender in your area.”

My lender is not registered and I would like to apply. What should I do?
You may contact any participating lender to apply. For a list of HUD approved lenders please go to our website at fha dot gov. In the section marked “At your service,” please click on the link “Find a HUD approved Lender in your area.”

Counseling questions
I am not clear on what to do. How do I decide if this is the right choice for me?
You can contact a HUD-approved Housing Counselor in your area. They can help you evaluate the different options that may be available to you, and help you determine your best course of action. You can locate a counselor in your area by going to our website fha dot gov and clicking on the link “Talk to a Housing Counselor.”

How can a housing counselor help me?
Housing counselors are knowledgeable about available programs to help struggling homeowners. They can review your specific situation, identify your options and help you make an informed decision.

Will I have to pay taxes on the portion of my loan(s) my current lender(s) “write off” or
forgive?
You should contact the Internal Revenue Service at 1-800-TAX-1040, or your tax advisor regarding tax-related questions.

[JPaterson]

HOPE for Homeowners
Examples of How Equity and Appreciation Are Shared

These are examples of how the unique equity and appreciation sharing elements of this program work. Keep in mind that these are only examples, and your actual experience will depend on many things, including how much your home increases or decreases in value

1. Let’s say your home has an appraised value at the time you receive your FHA mortgage of…………. $200,000.
2. And your mortgage is 90% of this, or……....
$180,000.
3. This means the initial equity is the difference between 1 and 2, or……………………………….. $20,000.

In this example, you and the FHA share this $20,000 when you sell your home or refinance your loan. Here’s how that $20,000 would be split:

If you sell or refinance:

During Year 1 FHA receives 100%, or $20,000 You receive 0%, or $0
During Year 2 FHA receives 90%, or $18,000 You receive 10%, or $2,000
During Year 3 FHA receives 80%, or $16,000 You receive 20%, or $4,000
During Year 4 FHA receives 70%, or $14,000 You receive 30%, or $6,000
During Year 5 FHA receives 60%, or $12,000 You receive 40%, or $8,000
After Year 5 FHA receives 50%, or $10,000 You receive 50%, or $10,000


So, if you sell or refinance right after receiving the new loan, the FHA keeps the equity that was created, and you don’t receive any of it. On the other hand, let’s assume you stay in this loan and don’t sell or refinance for ten years. At that point, you’re entitled to half of the equity – in this example, that’s $10,000 – and the FHA is entitled to the other half.

In addition to this equity sharing, you will have to share any future home price appreciation with the FHA. This means that, if your home has gone up in value between the time you receive your FHA mortgage and the time of your home sale (or other disposition), you will share the amount of this increase with the FHA (less closing costs and a portion of any improvements you have made). This is a 50/50 split that does not change over time.

For example, if:
1. The value of your home when you take out this loan is……………………………………………. $200,000
2. After some years, you decide to sell. Now the home is worth…………………………………… $250,000
3. That means the appreciation is the difference between 1 and 2, or……………………………… $50,000
In this example, you would keep half of this, or $25,000. The FHA would also receive half, which is also $25,000.

But what if the value of the home goes down?

4. The value of your home when you take out this loan is……………………………………………. $200,000
5. Now you sell, and the home is only worth…………………………………… $175,000
6. That means the appreciation is the difference between 1 and 2, or……………………………… -$25,000

In this example, the appreciation is actually negative (the home has depreciated), so there is nothing of financial value to share. As far as the appreciation sharing feature of your HOPE for Homeowners loan, neither you nor the FHA would receive anything.

These examples assume that there are no closing costs when you sell your home and that you have made no improvements to your home.

Again, keep in mind that these are just examples, and your actual experience will vary depending on factors such as: How much your home is worth when you get a new HOPE for Homeowners loan, how long you stay in your home, and how much your home is worth when you sell.

[LVrealestateHELP]

Have any of you used the H4H program and completed a modification for the homeowner through that program? From what I have been told H4H is not actually being used because lenders are not agreeing to participate. Any info on this would be helpful. Thank you.

[ModificationDoctor]

This was a great update. Thank you. It will be interesting to see how many lenders will actually PARTICIPATE in the Hope program. My fingers are crossed.

[ahmedwali]

HI,
Mortgage homes are now ver unsafe due to slump in overall business. Reports shows many people will be homeless in coming years!!!!!!!!!!1

[ShanetheMortgageMan]

Originally Posted by LVrealestateHELP

Have any of you used the H4H program and completed a modification for the homeowner through that program? From what I have been told H4H is not actually being used because lenders are not agreeing to participate. Any info on this would be helpful. Thank you.

I have not heard of any lenders helping out homeowners who have their mortgage with other mortgage companies... but I have heard of the homeowners lender willing to look into these, primarily Flagstar made an announcement stating that they will help their current customers with the H4H program but only through their servicing channel (not the new loan channel). I have not seen anything in the revised guidelines that would help a lender want to make a loan - I can see how they are making it easier for lenders to approve, but what secondary market investor wants to make a new loan to someone who was just having issues with their old loan? That is why existing investors are more likely to help because they are already in a hole with the borrower not being able to make payments as agreed - a new lender doesn't want to take on that situation.

[RNEileen]

Having the government as a co-owner in your house, entitled to your equity, does not seem like a good deal to me.