FHA-Hope for Homeowners Program

Overview-The Housing and Economic Recovery Act of 2008 (HERA) amends the National Housing Act to authorize a new temporary FHA mortgage insurance program called the HOPE for Homeowners (H4H).

Under this program, homeowners who do not have sufficient funds to meet their mortgage obligations as of March 1, 2008, but have made a minimum of six full payments during the life of their first mortgage, may be permitted to refinance into an FHA insured 30 year fixed rate mortgage.

Borrowers must agree to:

1. Share both the equity created at the beginning of this new mortgage and a portion of any future appreciation in the value of the home.
2. Not take out a second mortgage for the first five years of the loan, except under certain circumstances for emergency repairs.

Effective Dates: The H4H Program is effective for endorsements on or after October 1, 2008, through September 30, 2011. All loans must be closed, funded and insured by FHA no later than September 30, 2011.

Lien Holder Requirements:

Each holder of an existing senior mortgage being refinanced must:

1. Waive all prepayment penalties and late payment fees.
2. Accept the proceeds of the H4H loan as full settlement of all outstanding indebtedness; and
3. Release their outstanding mortgage liens.

Each holder of an existing subordinate mortgage must:

1. Waive all prepayment penalties and late payment fees (including insufficient funds fees) on the mortgage, and
2. Release their outstanding mortgage liens.

Borrower Eligibility Requirements:

1.  
   • The existing mortgage was originated on or before January 1, 2008.
   • Borrowers may be current or delinquent on their existing mortgage(s).
   • Have not intentionally defaulted on their mortgage or any other debt.
   • They are unable to pay his/her existing mortgage(s) without help.
   • Must certify that they have not been convicted of fraud in the past 10 years.
   • Borrowers must certify that they did not knowingly or willfully provide material false information to obtain the existing mortgage(s) being refinance under the H4H Program. (Borrowers original 1003 and/or servicing records must support the above).
   • PITI payment on the new H4H loan must be less than the PITI payment on their current mortgages (based on fully indexed fully amortized PITI).
   • As of March 1, 2008, the borrower's aggregate total monthly mortgage payment debt to income ratio (DTI) on all existing mortgages must be greater than 31 percent of the borrowers gross monthly income.