Program Begins: October 1, 2008 Ends: September 30th 2011
FHA will insure up to $300 billion in refinance mortgage for borrowers having difficulty making payments but can afford a new loan insured by the FHA.
For borrowers who refinance under this program, lenders will be required to write down the size of the mortgage to a maximum of 90% for the home's new appraised value. This could be a benefit for both the home owner and lender in that the lender my not have to go through the costly foreclosure process and the homeowner may be able to stay in their homes.
Eligibility: Borrowers should contact their lenders to determine eligibility but may be eligible if ,among other factors:
*Borrowers my be current or delinquent on the mortgage(s)
*The home is their primary residence, and they have no ownership in any other residential property.
*Their existing mortgage was originated on/or before January 1, 2008 and have made a least 6 payments
*They are not able to pay for existing mortgage without help
*As or March 2008 their total monthly mortgage payments were more than 31% of gross monthly income
*They certify that they have not been convicted of fraud in the past 10 years, intentionally defaulted on debts, did not knowingly or willingly provide material false information to obtain their existing mortgage(s)
How the HOPE for Homeowner's program works:
*The loan amount may not exceed a maximum of $550,440
*The new mortgage will be no more than 90% of the new appraisal value including any financed Upfront Mortgage Insurance Premium (P.M.I.)
*The Upfront P.M.I. is 3% and the Annual P.M.I. is 1.5%
*The holder 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 for all outstanding indebtedness. Existing subordinate lenders must release their outstanding mortgage liens.
* Standard FHA policy regarding closing costs apply. Closing costs can be financed into the new loan provided the value, the cost can be paid by the borrower, or by the servicing lender, or through originating lender through premium pricing
*The borrower must agee to share with the FHA both the equity created at the beginning of this new mortgage and any future apprecaition in the value of the home
*The borrower cannot take out a second mortgage for the first five years of the loaned, except under certain circumstances for emergency repairs.
Sharing of Future Equity
The cost to the homeowners 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 appreciate 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 100% FHA share after the first year to a minimum of 50% after 5 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.
Have a great day!
Victoria Wyatt
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