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FHA HOPE for Homeowners Program - aka the H4H Program

FHA Hope program FHA Hope for Homeowners has finally arrived. The Housing and Economic Recovery Act of 2008 amended the National Housing Act to authorize a new temporary FHA mortgage insurance program called HOPE for Homeowners. This is also know as the H4H program.

This program, even though introduced on HUD's web site over a month ago, takes effect October 1st, 2008. This is all included in Mortgagee Letter 2008-29. It's very detailed, with 13 pages of details and guidelines which I am about to explain the important basics.

Eligibility is always important and determining this has many facets to the FHA Hope for Homeowners program.

Determining Eligibility :

Borrower Eligibility

Any borrower can be current or delinquent to refinance for the FHA Hope for Homeowners if they :
- - have made a minimum of 6 full mortgage payments on their current mortgage that is in 1st lien position.
  - and have not intentionally defaulted on their mortgage or any other debt. Intentionally defaulted means that the borrower had available funds that they could use to pay for these debts without hardship.

Borrowers must reside in the property and can't have ownership interest in any other property(s) such as second homes or investment properties and even to include being a non-occupant co-borrower on another property.

The borrowers total monthly payment for the debt-to-income ratio must be greater than 31% as of March 1, 2008. The total payment is to include principal, interest, taxes, insurance, association fees, ground rents, special assessments, and all subordinate liens. (there are guidelines in mortgagee letter 2008-29, on how to obtain evidence that the DTI was 31% or higher on or after March 1, 2008.

Mortgage Eligibility

The mortgage being financed must have been originated on or before January 1, 2008.

Here is something key... the note holder of the mortgage being refinanced must :
- - Waive all prepayment penalties and late fees
  - Must agree to accept the proceeds of the new H4H mortgage as full payment
  - And release their outstanding mortgage liens

Property Eligibility

As stated in the beginning, the property must be the borrower's primary and their only residence that they have interest in. If their is a non-occupant co-borrower involved, they will need to quit claim their interest prior to the borrower applying for the HOPE for Homeowners program.

Only 1 unit properties are eligible, to include condos, and co-ops.

Underwriting Guidelines

The normal FHA debt-to-income ratios are 31%/43%. These respectively can't exceed 38% for the front ratio and 50% for the back ratio.

In order to exceed the normal debt-to-income ratios, there is a 3 consecutive month 'trial modification' period prior to the loan application. This is so the borrower can demonstrate their willingness to make a mortgage payment on the H4H program that would not exceed 38/50.
Non-occupant co-borrowers can be added in order to meet these underwriting guidelines. Yes, this contradicts what I stated under property eligibility.

Equity and Appreciation Sharing

Shared Equity Mortgage
- - As a condition to the new HOPE for Homeowners program, the borrower must share a portion of the initial equity with HUD. This is defined as the difference between the appraised value and the new mortgage amount not exceeding 90% of that appraisal. This is to be recorded as a second lien by the originating lender.

Shared Appreciation
- - As another condition of this new program, the borrower must share with HUD 50 percent of any future property appreciation upon sale, a refinance, or disposition of the property. There is a chart showing what is paid out to HUD per year. HUD's percentage decreases as the years of ownership decline.

Some other key points......

This program can only be used on a FHA 30 year fixed loan.

The Upfront Mortgage Insurance Premium (UFMIP) is 3.00 percent regardless of the LTV (loan to value) And the monthly mortgage insurance is 1.5 percent of the base loan amount. This is significantly higher than the normal monthly charge which is .5 percent.

The FHA nationwide maximum mortgage limit is $550,440. You still need to follow the FHA maximum county limits. And the LTV for this new FHA Hope for Homeowners program can't exceed 90 percent, which is to include the UFMIP (upfront mortgage insurance premium)

Summary : Talk about how this is much better than most programs introduced in the last 18 months...especially the one that was taunted as saving America, which was the FHA Secure loan. I truly think the FHA Secure loan was just a plea of help and mostly propaganda, trying to show that the government was trying to help, and that HUD was trying to help.

It finally sounds like HUD finally put their heads together and came up with something good. The biggest challenge will be those that hold the borrowers current note, will they free up some of the old mortgage balance/principal. And keep in mind, this program makes no lender or investor currently holding a borrowers mortgage to conform to the FHA HOPE for Homeowners Program.

I am baffled

Loss Mitigation or Bust -- What is great about the new HOPE for Homeowners program is that HUD has realized that they need to make it interesting to those lenders that would be asked to take a loss, in order to participate in this FHA program.

As I mentioned in the Equity and Appreciation Sharing section above, FHA will be keeping a portion of the current equity and any future profit from the home. Well, FHA/HUD will actually share half of this equity and appreciation. That alone should give an incentive to the current lien holder to participate in this program. If not, aren't they gambling with the foreclosure gods? If you read this comment from below, you will see how the current lien holder would have a better chance to save money instead of losing money. What wasnt mentioned was the fact that the lender would still have to pay a commission to the realtor also. In my scenario, that could be another $8,000 to $16,000, making the foreclosure process even more expensive to the lien holder than participating in this new FHA program. Besides, there is less risk now for that lien hold also.

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Posted by Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans on 10/09/2008 09:41 AM

Comments (34)

FHA Loans in the Mortgage / Finance Channel

fha hope for homeownership, hope for homeownership, h4h program, fha loans, fha mortgages, mortgages, fha secure

Originally posted at: FHA Mortgage Expert - Tri-State Area - New Jersey/PA/Delaware: FHA HOPE for Homeowners Program - aka the H4H Program

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34 Comments on FHA HOPE for Homeowners Program - aka the H4H Program

OCT

2008

Thanks for the great info. Jeff. Hopefully this will help out some people.

Jeff - I actually think this program stinks. I don't see, in most cases, where the lender will be willing to waive the amount of the loan that they will to make it work. Maybe, when the government ownes these "toxic" mortgages that will happen, but right now the lender makes more by going through foreclosure. At least that is the way I calculate the program.

Thanks for your insight into the program.

ADRIANA..... my pleasure and thanks.... I hope it does... I guess time will tell.

FRED...... okay, let me ask you this question. Which one do you like better? This one or the FHA Secure program? I understand where you are coming from, but I am a stats and numbers guy. You said that the lender makes more going through a foreclosure? How is that? Sure, maybe their lawyers do, with the legal fees. But the lender still takes a major hit. Again, I am a stats guy. Let's take this into account...

Let's say you owe $300,000 and your payment is $2,700 a month to include taxes and homeowners. The lender still needs to keep making homeowners payments and property tax payments. If the homeowners stops and there is a fire, there is no money. If property taxes lasp, the township can take over and leaving the lender in the dust.

So... if I am paying $2,700 a month and it takes 4 months just to go into foreclosure, then that is $10,800. Let's say it takes 6 months to sell the house. That is an additional $16,200. Now the total is $27,000.

Now, let's say the house has dropped in value and is now worth $290,000. 90 percent of that is $261,000. So the bank would have to take a settlement for about $255,000, which means that the lender now loses $45,000. That's if they just said to the consumer, okay, we fold... we are reducing your payoff.

But wait... let's make money and let the borrower go into foreclosure, because we can make money. So, they owe $300,000.... and in my first statement, the bank has lost $27,000 because of back payments. The house is only worth $290,000 and someone is going to try and buy it for $280,000. Now the bank says, shit, let's cut our losses now. They sell it for $280,000, which means they lost $20,000 on the equity. Plus, the $27,000 of non payments... that is $47,000.

Overall, they just lost $2,000 more in letting the property go into foreclosure. But wait... let me bring up another issue.... how many homes get destroyed while going into foreclosure? In most cases with appraisals, the work needs to be done before settlement. That means that the lender comes down in another $10,000 in price or has to put some money out of pocket.

So, my question to you, how do banks make money off of foreclosures? I am not trying to be rude or harsh here. I really would like to know. If I am missing something, please point it out to me. Everything that I just talked about was an assumption and opinion, since I am not my own bank with a portfolio.

I will say this, which I stated at the end of my blog. I truly think that HUD should include the current lien holder into the equation. That they could possibly get some of this back. Now, I haven't read the new bailout info as of yet... do lenders get compensated for this? thanks

as always, very well done Jeff. I am taking a stab at the re-blog again, please review and let me know if you are cool with the way i did it.

thanks

Chris the implementer

As a banker I want Fred's foreclosure operations manual. If I can make money on foreclosures sign me up. Remember, with HOPE, if I am the investor and I accept a HOPE program short refi I also receive a promisorry of future equity appreciation which I share with HUD. I'm shorting to 90% of marked to market but taking an incentive in a possible net increase in return on future upward value. Essentially what HOPE is asking me to do is to accept the current risk - transferring the immediate exposure from the borrower to my portfolio - in exchange for future returns. Instead of costing my portfolio the $47,000 in hard mark downs (irrecoverable) from Jeff's math plus another $8k in attorney fees and another $10k in commissions I am taking a short refi and marking down my book by 30% - but I am still receiving future earnings possibilities ... remember street hockey players, I took front loads for 6, 12, 18 months on this paper.

Jeff, I am glad to hear of this plan and while it might not help everyone, it certainly might benefit some people. I hope it does and it's wonderful information for consumers.

OCT

2008

CHRIS...... thanks for the compliment. And yes, I saw the re-blog... thanks...

KEN...... I forgot to get even more technical as yourself. Meaning, to bring up the fact that in most cases, you need a realtor to sell your foreclosure. So in my example, that is another $16,000 that the bank will lose. If anything, at least $8,000, depending on the commission structure. Thanks for your input...

CAROLE...... it's good... everyone could win in this one. Even the current lender holding who would need to give up some money now. It just comes down to negotiating with the current lien holder.

OK, before you beat up on me, I didn't say you could make money on foreclosure. I said the bank could make more on a foreclosure than it could with the Hope program. A couple of numbers you didn't figure into the equation. Yes, you can get a 90% of current value loan, however, there are the closing costs (=/- 3.5%) and the 3% UFMIP (which is not financed) that the lender will also have to eat, because the homeowner doesn't have any money or he would have been making his payments anyway. Now, we have the current lender only getting $244,850 and they are going to be out the back payments anyway.

The people that I have talked to said their lender won't waive principal but they will restructure the loan. The other big deal is that the program doesn't work with anyone that falsified any information on their original application. That means noone with a state income loan qualifies. Also, they have to be qualified for this loan and I have yet to find out exactly what this means as far as credit is concerned.

All I am saying is that I can't see any lender taking this deal. Also, I haven't found any wholesale lenders yet that will take the loan. Doesn't mean they aren't out there, I just haven't heard of one yet.

Also, for Ken, as a lender you don't participate in future increase in value. The borrower splits it with Uncle Sam. The lender is out of it.

I hope that I am wrong and this works. I just don't believe that it will. Remember, this is voluntary on the part of the lender. VOLUNTARY.

I had to come back for an edit. Is it better than Secure? Probably not because you couldn't get an approval for a Secure and the value was never enough for the Secure. In my opinion, both programs fall way short.

Fred - were you in the meeting with us at HUD?

No, I got my information from HUD's release:

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.

Unfortunately, the original release didn't say anything about the certificate the lenders would get giving them a share of the increase of value at future sale. So, I stand corrected.

No problem Fred - and I thought perhaps you understood something we didn't. Our guidelines are based on Section 257(e)(4)(B) of the H4H Final Rule:

Section 257(e)(4)(B) requires that, at a minimum, the Board take into consideration three factors in determining the amount of appreciation a subordinate mortgage lien holder may receive. The first factor is the status or relative priority of the subordinate liens. This factor is addressed in the payout allocation set forth in the rule. After sale or disposition of the property, HUD's 50 percent appreciation interest is paid to prior mortgage lien holders in order of the seniority in which their mortgage liens were held, to the extent of HUD's share. Mortgage lien holders that were in 2nd position behind the 1st mortgage will be paid first, then 3rd mortgage lien holders, and when the claims of all prior lien holders have been satisfied, HUD will retain the balance, if any.

OCT

2008

Jeff you did a really great job on this post. I am flagging it to consider as a featured article.

The one thing that I wanted to verify, what happens to any existing second mortgages?

Are you saying they just get on there (title) as a lien to be paid at a later late. Does that amount ever reduce? Does the lien ever disappear? What if that 1st mortgage were paid off and it moved into 1st lien position?

Are there no payments required on that secondary lien? Is there any interest that accrues on this lien?

I agree Jeff, this is a great post an this change giving the original lien holders a stake in future payout may make a difference. I certainly hope it does. I have always had hope for HOPE. Has anyone heard of any lenders yet that will do the loans? I can't find anyone.

OCT

2008

Here is information pertaining to understanding more about the appreciation sharing with the existing mtg lien holders.

2580-AA01

FHA's HOPE for Homeowners Program:

U.S. Department of Housing and Urban Development

Office of Housing

Federal Housing Commissioner

OMB Approval No. -----(Exp. -------)

Understanding Key Provisions of Appreciation Sharing

•· Loans made under the FHA's HOPE for Homeowners (H4H) Program include a requirement that the borrower share future property appreciation with HUD. As an existing subordinate mortgage lien holder, you may be eligible to receive an interest in any future appreciation actually received by HUD at the time the property is sold.

You must fully release all liens against the property and release all claims against the borrower related to your mortgage loan to the borrower.

Determining the Appreciation Share

During underwriting of the H4H loan, the originating lender will calculate future appreciation interest amount for each subordinate lien holder's election according to the procedures below. The lender will:

•· Request pay off statements identifying the total principal and interest due each existing mortgage lien holder.

•· Add the unpaid principal and interest of liens held by each subordinate mortgage lien holder and all holders with liens senior to that subordinate lien holder (as of the first day of the month in which the borrower has made application) to determine the cumulative outstanding debt relevant to that lien holder.

•· Divide the cumulative debt by the new appraised value to determine a cumulative combined loan-to-value (CLTV) relevant to that lien holder.

Cumulative CLTV Illustration

Amount Owed	1^st Lien P&I	2^nd Lien P&I	3^rd Lien P&I	Total P&I
Principal (P)	158,500	20,000	40,000	218,500
Accrued Interest (I)	10,900	2,200	4,400	17,500
Total P&I	169,400	22,200	44,400	236,000
Cumulative P&I as a % of Current Appraised Value of $150,000	112.9%	127.8%	157.3%

Using the matrix below, the lender will calculate the future maximum future appreciation interest amount for each subordinate mortgage lien holder by multiplying the amount of that lien holder's write-off by the percentage factor in the matrix.

Subordinate Lien Appreciation Matrix

Subordinate Lien Holder

Percent of Unpaid Principal and Interest that Lien Holder is Eligible to Receive *

Cumulative CLTV >135%

Cumulative CLTV <135%

12%

* As discussed below, a future appreciation payment to a subordinate mortgage lien holder will depend on actual appreciation at the time of sale or other disposition of the property and the aggregate of such payments will be limited by the amount HUD receives from its interest in the future appreciation of the property. Payment will be made according to the subordinate mortgage lien holder's position of priority in relation to the property at the time the H4H mortgage is originated.

Future Payment Example

Assume that at the sale or other disposition of the property, referenced above in the Cumulative CLTV Illustration, the difference between the property's appraised value at origination of the H4H loan and the net sale proceeds resulted in $20,000 of appreciation. HUD is entitled to 50% of this appreciation ($10,000) and will share it with subordinate mortgage lien holders as follows:

•· The second mortgage lien holder has a CLTV of 127.8%. Because the CLTV is less than 135% of the current appraised value, the second lien holder is entitled to receive 12% of its total write off of $22,200, for a maximum payment of $2,664. From HUD's $10,000 share, the second lien holder receives the first $2,664.

•· The third mortgage lien holder has a CLTV of 157.3%. Because the CLTV is more than 135% of the current appraised value, the third lien holder is entitled to receive 9% of its total write off of $44,400, for a maximum payment of $3,996.

•· HUD retains the balance of $3,340 ($2,664 + $3,996 + $3,340 = $10,000).

* In this example, it is assumed that the borrower made no capital improvements to the property prior to sale and all subordinate mortgage holders were eligible and elected to receive a share in future appreciation. Please see Mortgagee Letter for further information.

Appreciation Sharing Terms and Conditions

•· Only the holders of subordinate "mortgage" liens that were originated before January 1, 2008 are eligible for appreciation sharing.

•· Subordinate mortgage lien holders whose total principal and interest write off is less than $2,500 are not eligible for appreciation sharing.

•· Only mortgage principal and note rate interest may be included in the amount used to calculate appreciation share. No other costs, fees, or expenses advanced on behalf of the borrower are allowed.

•· Interest cannot be accrued at a default rate of interest, but must be the contract rate in effect prior to the default.

•· The lien holder must fully release the borrower from the debt and may not have any side agreements with the borrower for repayment that survive the date of settlement of the new loan.

•· At settlement, subordinate lien holders will receive a certificate that evidences the future appreciation of the mortgaged property , with payment conditional on the value of HUD's appreciation share.

•· Future appreciation distributions will be made only upon sale or disposition of the property, which could be many years in the future. There is no provision for forcing an earlier sale or distribution.

•· The future appreciation interest involves risk. In the event that there is only a modest increase or a decrease in a property's value there may be insufficient future appreciation available for distribution to any or all subordinate mortgage liens holders, in which case they will have no recourse against the Government or the borrower.

FHA's HOPE for Homeowners Program:

U.S. Department of Housing and Urban Development

Office of Housing

Federal Housing Commissioner

OMB Approval No. -----(Exp. -------)

Appreciation Sharing Worksheet and Certification

Borrower Name(s) _______________________________________________

Property Address _______________________________________________

Originating Lender Name _______________________________________________

FHA Case Number _______________________________________________

Subordinating Lender / Lien position ______________________________ ______________

Appraised Value / Appraisal Date _______________________ _____________________

Amount Owed	1^st Lien P&I	2^nd Lien P&I	3^rd Lien P&I	Total P&I
Principal (P)
Accrued Interest (I)	+ _______	+ _______	+ _______	+ ___________
Total P&I	=	=	=	=
Cumulative P&I as a % of Current Appraised Value (AV)				Current AV

Future Payment ________________ x ____________ = $____________________

Total P&I Write Off Matrix % Maximum Future Payment

By signing below, the undersigned certifies that the statements and information contained herein are true and correct. On behalf of _____________________________, the undersigned subordinate mortgage lien holder certifies that it will release in full all mortgages secured by the subject property in exchange for an Interest in Future Appreciation in the subject property to be paid from HUD's share of said appreciation, if any, in an amount not to exceed $_____________________.

_________________________________________________ ___________________

Subordinate Lien Holder Authorized Signature / Title Date

__________________________________________________ ___________________

Originating Lender Authorized Signature / Title Date

Warning: It is a crime to knowingly make false statements to the United States on this or any other similar form. Penalties upon conviction can include a fine and imprisonment. For details, see: Title 18 U.S. Code Sections 1001 and 1010. False statements may also be the basis for civil and/or administrative penalties. For details, see: Title 31 U.S. Code Sections 3729 et seq., and 3801 et seq., as well as 12 U.S. Code Section 1735f-14.

Unfortunately...while a neat theoretical "life line" for distressed borrowers...it is a confusing cocktail to swallow and as such will help few people than the FHA Secure. Wish it weren't so. True loan modification directed by a 3rd party via binding arbitration is the only thing that will work. Just my 2 cents.

Jeff, Ken & Sal,

OK, sorry to be a pain, but I am, I think, confused or else I understand the program and it is confused. Am I reading that the first mortgage holder will not participate in the SEM when the property is finally sold? Does it also say that the maximum received for 2nd and higher lien holders is 12% of their P&I balance at the time the new loan is made?

If I am right and there is just a first mortgage for more than is owed against the property, I still don't see the value of waiving the equity to the mortgage holder. Is that right, or am I just being dense? Sorry for my confusion. I do understand why the 2nd and subsequent lien holders would jump up and down with the possiblity they would get something back in the future when they would get nothing in a foreclosure anyway.

Thanks for your assistance.

OCT

2008

Fred, the way I read it HUD is referring to themselves as the 1st lien holder in that example, hence no calculation. Remember they are referring to recapture after the sale of the property AFTER the H4H mortgage.

...but I may be wrong?

Gerry Suarez, Jr.

Your FHA Loan Pro!

OCT

2008

I spoke with HUD, a real live person today. The "lenders who are participating" in the H4H program are not capable of doing the loans...most are brokers or correspondent lenders. They removed the link to sign up but haven't taken down the list yet. HUD screwed up and because the program is voluntary, no servicer is doing the program because they might be able to sluff the loan off via the $700billion bailout to no-where.

The H4H program assumes that there will be future equity at some time...dream on! Sorry, nice idea, and were it not for the $700b bailout de-incentivising banks to do this, it might have staved off the inevitable for a couple of years. I know that I have been sounding very pessimistic lately, but the facts supporting a continued total financial collapse via the impending Bubble burst in the CDS market and Hedge fund black hole don't let much to optimism.

Lend America is trying to capture consumer interest but they still are needing the most important player to buy in...the note holders and in some cases the servicers. They are also attempting to arrange a big warehouse line to hold these gems. They say the program and got their marketing materials in order and are believing, "If we build it, they will come!" Problem...we have a reluctant prom queen. They are not "ready to go," and cannot guarantee a borrower anything, they can get them in the door, but they can't make the banks play ball! Even on HUD's site, borrowers need to first talk to the servicer or bank of their current loan. Don't get your hopes up.

OCT

2008

i was wondering which lenders do the new mortgages? we have a servicer now because our mortgage co. went bankrupt. now first boston credit suisse, us national bank assoc. & select portfolio servicing has this loan & sps says we do not have have lender & we found out on our forebeareance that cfredit suisse of first boston & us nat. bank also are investors in the loan. anyway our servicer says to find a lender and they would drop the price of the house down to 140,000-170,000. but we cannot fing a lender. our original mortgage is 225,000. i have been on the bbb & rip off report & they say a lot of bad things about sps. we have 1 more more on our forebearance and then we do not know what to do. sps says they cannot give us a loan because they are only a servicer, not a lending company.they buy up mortgages that eventually fail. we are on a arm and comes up in 12-01-08. can you help? thank-you very much!

PAM...... please e-mail me at jbelonger@ihmci.com or call me at 609-440-5133 thanks, jeff

Am I correct in my interpretation that the homeowner must pay for the upfront MIP and closing costs "out of pocket"? I get numerous calls each day regarding H4H, and it appears that at max financing of 90% of new appraised value, there is no way to finance the MIP and close costs. Hoping I am wrong.

RON.... you are semi correct. But it doesn't mean that the borrower has to pay for these items in cash... or out of pocket. Here is a comment that I left for someone else on another post about the FHA HOPE program.

t............. but that is where common sense comes into play. You would need the current lien holder to come down to about 84% of the appraised value. Leaving room for the MIP and or the closing costs.

Also, you can get creative... how about having the borrower skip their mortgage payment in October, but that you still need to settle in October. This would free some money up also. The borrower is still going to skip Novembers payment also... so, you could close on the 27th of October, bring October and Novembers payments to the table, to pay for the closing costs at least.

Thanks for the quick response. Like a lot of lenders, I am not sure that the plan will help many people as there are a lot of land mines to navigate. I am just looking for the path to get to the closing table safely. I seem to remember something about a borrower "NOT" willingly missing a payment in my readings. Sounds like a catch 22, if they are holding back some cash to bring to closing.

I am not trying to be combative. Believe me, I want to find a way to make it work as there is a lot of this business to be had in Florida. Being able to provide a service that many people want creates a win-win situation for all involved. I'll keep checking in.

OCT

2008

Great post Jeff. You seem to have the most accurate information available. I sent you an email concerning my problems in NY.

I have talked to my service provider and they told me they have not made a decision if they will participate in the H4H Program. They advised me to go to the FHA website and find an approved lender and have this new lender make the proposal to them. My problem, who is writing these loans? I have spoken to a number of FHA Lenders in my area and they advised me the government has not given them the guidelines or okay to write these loans. Is this true? I thought the program took effect Oct. 1, 2008?

OCT

2008

I have talked to my service provider regarding the H4H Program and they will not commit if they will participate in the program. They advised me to locate an approved FHA lender and have the new lender make a proposal to them. I live in Southern Calif, where homes prices have drastically dropped and I am about $200,000 upside down. My monthly income has decreased 25%, which has made it difficult for me to keep up with my mortgage. I looked at the FHA guidlines and I do qualify. My problem, who is writing these loans? I have spoken to a number of FHA approved brokers in my area and they advised me the government has not given them the to ahead to start this program. Is this true? I thought the program took effect Oct. 1, 2008?

OCT

2008

this is a great bunch of posts. I am always looking for ways to help the real estate community and this website will certainly keep me informed.

So, is it correct to say, no wholesale lenders are participating with HOPE?

thanks to everyone. ;-)

OCT

2008

You stated that, "You still need to follow the FHA maximum county limits." Where in the Mortgagee Letter did you see that County Limits still apply? It appeared to me to supercede or abrogate that requirement in favor of the National Maximum.

NOV

2008

This is a very informative post. Problem is, many people are upside down in equity. Thanks for the information!

NOV

2008

Yes it is true , i WAS TOLD BY MY LENDER THEY WILL PARTICIPATE AND THAT THEY WILL CONTACT ME AS SOON AS THEY GET THE GUIDELINES , THEY TOOK THE INFORMATION NEEDED AND PREQUALIFIED, AND AM TOLD THAT MY LOAN HAS BEEN TRANSFERRED TO FHA... AND WILL JUST WAIT NOW TO SEE WHAT HAPPENS NEXT. hOWEVER AS OF NOV, 20 NEW LAW WITH CHANGES TO THE H4H PROGRAM THAT HAS MADE IT MORE ATTRACTIVE FOR THE LENDERS AND INVESTORS TO PARTICIPATE... i BELIEVE THIS IS THE ONE, mY LOAN OFFICER TOLD ME I QUALIFIED AND THAT I WAS PAYING OVER 75% OF MY MONTHLY GROSS INCOME. AND THIS IS AFTER I HAD RECEIVED A LOAN MODIFICATION THAT WAS NOT SUSTAINABLE. hE SAID MY LOAN OF $488,000 COULD POSSIBLY BE WRITTEN DOWN TO $283,000 BECAUSE MY HOMEIS UPSIDEDOWN AND SHOULD BE PAYING ONLY %31 OF GROSS MONTHLY INCOME tHIS IS GOOD FOR ALL OF US STARTED A WEEK AND A HALF NOW TOLD COULD TAKE 30 TO 60 DAYS WILL TELL ALL WHEN AND IF THIS WAS A GOOD DEAL FOR ME AND IF IN FACT THEY DO WHAT THEY SAY. i am current SO FAR , BUT JUST KNOW ANYTIME THINGS COULD GO ALL DOWN HILL AND I HAVE BEEN STRUGGLING WITH THIS LOAN EVERYSINCE I GOT IT, BACK IN 2006. PREDATORY AND FRAUDULENT, ACTUALLY BANKRUPT ME, OF ALL SAVINGS AND A 401K.

LATER,

DEC

Jeff, just saw this headline today and thought I'd add it to the thread - "A federal program designed to help 400,000 struggling U.S. homeowners has attracted only 312 applicants since October, a government agency said"

Gee, 312 applicants. There's a winner of a program!!

Full article is http://www.bigbuilderonline.com/industry-news.asp?sectionID=0&articleID=830900

Maybe they'll come up with something trully helpfull after the first of the year. Maybe.

Mike

I agree with Michael, this program ended up a dud for reasons that were pretty obvious. Lenders lost tons of money UPFRONT, and gained nothing if the borrower pulled through or the market rebounded. Meanwhile, the borrower and FHA gained upfront and could gain more if the housing market rebounded.

Foreclosure is a worse option, with a higher cost to the lender. But why wouldn't lenders just modify the payments or principle and keep the loan if there was any chance the borrower could continue to pay?

Only the worst scenarios where the banks were certain to lose money would be approved by them. Better to pass the buck along than pay for the foreclosure process themselves. This has finally been realized and they are making modifications to the program. Not sure if its enough, but lenders have clearly spoken and said they are not interested in the current H4H program.

MAY

Im not sure that I fully understand what is being said. I came here to investigate H4H and I think this is just another bunch of rethoric that will only help one home owner in then next 7 months. It seems to me that the banks, lenders and brokers are still trying to make money off the backs of homeowners whos back has been already broken. Why in the world would I agree to "share" the equity and future profit of my home with anyone when they have already taken my cash downpayment and devalued my home by writing loans to people they shouldnt have who have now walked away scot free and destroy the real estate values for the next 10 or 20 years.

Am I wrong?

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