What is the HOPE for Homeowners act of 2008 (H4H)?

Real Estate Sales Representative with The Lang Team - Keller Williams Realty

The goal for the HOPE act briefly is to:

  • To create an FHA program, with voluntary participation on the part of the homeowners and existing loan holders to insure refinanced loans for distressed borrowers to support long-term, sustainable homeownership;
  • To allow homeowners to avoid foreclosure by reducing the principle balance outstanding and interest rate charged on their mortgage;
  • To help stabilize and provide confidence in mortgage markets by bringing transparency to the value of assets based on mortgage assets;
  • To target mortgage assistance to homeowners for their principal residence;
  • To enhance the administrative capacity of the FHA to carry out its expanded role under the HOPE For Homeowners program;
  • To ensure the HOPE For Homeowners remains in effect only for as long as necessary to provide stability of the housing market; and
  • To provide servicers of delinquent mortgages with additional methods and approaches to avoid foreclosure.

 Who is eligible?

  • Borrowers who are current and are currently delinquent on their existing loans at the time of refinance are eligible.
  • The borrower must not have intentionally defaulted on their mortgage or any other debt (meaning the borrower had the funds but chose not to pay the obligations) and has made a minimum of six (6) full payments during the life of the existing mortgage.
  • The borrower must reside in the property and not have any other ownership interest in other property, including second homes or investment properties.
  • The borrower must not have been convicted of fraud under federal or state laws in the past 10 years.
  • Borrowers must certify that they did not knowingly or willfully provide material false information to obtain the existing mortgage being refinanced.
  • As of March 1, 2008, the borrower's aggregate total monthly mortgage payment debt-to-income ratio on all existing mortgages had to be more than 31% of the gross monthly income at the time. 

What existing mortgages are eligible under this program?

Any type of mortgage loan is eligible including: conventional products (Prime, Alt-A, Subprime), Government loans, fixed rate or adjustable loans. However;

  • The mortgage must have been originated (closed and funded) prior to January 1, 2008.
  • The current priority mortgage holder must:
    • Waive all prepayment penalties and late payment fees (including NSF fees).
    • Agree to accept the new H4H loan as payment in full and release the outstanding mortgage.
  • The subordinate lien holder must:
    • Waive all prepayment penalties and late payment fees (including NSF fees).
    • Release mortgage lien.

The end result is the refinance of a mortgage for a lower principal balance at 90% LTV FHA loan, by the existing lender forgiving the upside-down balance.

Posted by

David Lang

Keller Williams Fort Myers & the Islands





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