First of all, let us define what is this HOPE program by FHA. HOPE for Homeowners Program, also known as H4H, which was created by Congress, was signed into law by President Bush, is an FHA insured program designed to assist borrowers at risk of default and foreclosure. Homeowners who are having problems paying the high-interest mortgages can now avail of this new program. Borrowers may be able to refinance their property into a more affordable payment. HOPE for homeowners program (H4H) is one option, which will keep the borrowers in their homes. This program begins October 1, 2008 and will end on September 30, 2011.
Second, your eligibility. You may be eligible if you own a 1-unit primary residence. Borrower/s should have no other properties, not even a second home, or rental. Your existing mortgage was originated on or before January 1, 2008, and you had made at least 6 payments on it. Your total monthly mortgage payment a month exceeds 31% of your gross monthly income, as of March 31, 2008. You must certify that you have not been convicted of any fraud in the last 10 years, did not intentionally defaulted on your debts, and did not willingly provide any false information when you obtain your existing mortgage(s).
How does this work? You should contact your existing lender, or servicing lender and any second lien holders. Ask them about this HOPE Program. Their participation is needed and very important for you to refinance into a HOPE program. If they will participate, and if they have the capability to underwrite the new loan, you may be able to refinance with them.
You will get a new loan based on the 90% of the current appraised value. The maximum loan amount is $550,440.00 nationwide. Interest rate will be based on the current market. Your lender will provide you these rates. Your existing lender/servicer must waive all prepayment penalties, late payment fees, must agree to accept the proceeds from this HOPE (H4H) program as full payment and release outstanding liens. The existing 2nd lien holder must also waive all prepayment and late fees plus release outstanding liens. If your existing lender/service does not have the underwriting capabilities, you may contact an Approved and participating FHA lender. Then this approved FHA lender will communicate with you and your existing lender/servicer. Your existing lender/servicer must agree to the above-mentioned procedures. I just would like to remind you that this HOPE for Homeowners program, (H4H) program is voluntary. Your existing lender/servicer might not participate but instead offer you a different solutions/program for avoiding foreclosure, like a loan modification.
There will be an upfront Mortgage Insurance Premium (UFMIP) of 3% and a yearly Mortgage Insurance Premium (MIP) of 1.5%. The standard FHA closing costs applies. They may be financed into the new loan provided the loan to value (LTV) will not exceed 90% of the appraised value, including the UFMIP. Closing costs may be paid from borrowers own money, or may be paid by the servicing lender. After you have taken a new loan, you should agree to share equity and any appreciation with the Federal Government (FHA), when you decided to sell or refinance your property in the near future. There is a table to this equity sharing. Your lender will discuss it to you. The new loan should only be one loan, meaning, just one new First TD loan. The lender will not accept any 2nd or subordinate loan.
Hope program guidelines says that only the existing loan servicer and FHA approved participating lenders can do it. If the existing servicer has the underwriting capabilities, you have to go with your existing lender/service. If your existing lender/servicer does not have the underwriting capabilities, you can go to the approved FHA participating lender. Brokers deal or third party loan origination is not yet available. This will be between the borrowers, the existing lender or the borrowers; the existing lender and the new originating FHA approved lenders.
Some of the FHA approved lenders are encountering some problems. If these FHA approved lenders will be using their own money to fund this loans, what happens if their warehouse lines are already full and need to unload or sell these loans. Where are they going to sell it? Right now, there are no ready investors listed to buy this kind of loans. FHA approved lenders are worried who’s going to buy their closed loans afterwards. As of this writing, there are still confusion as to the and how to deal with this program. Borrowers are also confused where to go and how to do it. . We hope that FHA will make their guidelines more crystal clear as soon as possible, so that we can start helping those borrowers who are in the brink of foreclosure.
Again, we strongly encourage you, the borrowers to please contact first your existing lender and any subordinate lien holders. Their participation is really important for you to refinance into this HOPE for Homeowners program. This program is voluntary.
Right now, our company cannot handle any “Hope” Program until we receive the updated guidelines from FHA.