Housing and Economic Recovery Act of 2008 Facts

Housing and Economic Recovery Act of 2008 Facts

Q. When did the program start?

A. The program started in October 2008 and will continue until September 30th 2011.

Q. How does this help struggling homeowners stay in their home?

A.Through the Federal Housing Administration or (FHA) it estimated that 400,000 of families in danger of losing their homes will be able to finance into a more affordable Government insured mortgage. The program offers Government insurance to lenders who voluntarily reduce the at risk mortgages to at lease 90% of the property's current value.

Q. How do Homeowners qualify?

A. To be eligible to qualify for the program the homeowner must:

1. Have a loan on an owner occupied principal residence. (No investment or secondary homes qualify.)
2. Have a monthly mortgage payment greater than a minimum of 31% of the borrowers total monthly income.
3. Certify that they have not intentionally defaulted on their existing mortgage and that they did not obtain their mortgage fraudulently.
4. Not have had any convictions of fraud.

Q. How can a homeowner participate in this program?

A. Homeowners should contact an FHA approved lender. The FHA approved lender will determine the size of a loan that the borrower can reasonably repay and that meets the requirements of the program. If the current lender agrees to write down the existing mortgage and make the new loan affordable, the FHA lender will pay off the discounted existing mortgage.The new loan must be a 30 year fixed rate.

Q. Do all lender have to participate in the program?

A. NO. The program is voluntary for lenders loan services and borrowers.

Q. Isn't this just a way to bailout speculators, investors, homeowners and lenders?

A. NO. It is tailored to help keep families in their homes. Remember:

• Only Primary residences are eligible
• Lenders must take big losses before they can participate. The owner of the old mortgage can get a maximum of 90% of the current value of the home which more than likely will be much less than the original value of the loan.
• Lenders must waive penalties and fees and must pay for the origination and closing costs of the new loan.
• FHA will get a portion of the future profits on the home to make sure that the Government and Tax Payers recoups it's investment long term.
• Foreclosed homes a significant impact on the value of everyones home so helping to prevent them is in everyones best interest.

Helpful Links

Main sites www.hud.gov    www.fha.gov

Who to contact at FHA http://www.hud.gov/offices/hsg/contacts.cfm

HUD Approved Counseling http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

FHA Secure Info  http://www.fha.gov/about/fhasfact.cfm

FHA Streamline http://www.hud.gov/offices/hsg/sfh/203k/203kslrp.cfm

Qualifying Ratios  http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/05-16ml.doc

FHA Keyword List  http://www,hud.gov.offices/hsg/keywords.cfm

How To Buy A HUD Home  http://www.hud.gov/homes/

Sign up for HUD Newsletters  http://www.hud.gov/offices/hsg/sfh/ref/hsregst.cfm

FHA Resource Center  http://www,hud.gov/offices/hsg/sfh//fhasourcectr.cfm

Infotmation provided by Shawn Gerhardson. A Mortgage loan Officer with Mortgages Unlimited in Minnesota