Hope for Homeowners Act- How much will homeowners get from this plan?
There is a new federal program called Hope for Homeowners Act . It began in October and is focusing on helping those debtors that are unable to pay their mortgages. It is estimated that almost 400,000 homeowners could avoid foreclosure through this program within the next three years.
This program will help to refinance mortgages for borrowers who are having difficulty making their payments, but can afford a new loan insured by HUD’s Federal Housing Administration (FHA).
The primary way homeowners will participate in the program is by working with their current lender and/or by refinancing your loan into a new 30-year fixed rate loan with lower payments.
Who is eligible to participate in this program?
Only owner-occupants who are unable to afford their mortgage payments are eligible for the program. No investors or investor properties will qualify. Homeowners must certify, under penalty of law, that they have not intentionally defaulted on their loan to qualify for the program and must have a mortgage debt to income ratio greater than 31 percent as of March 1, 2008. Lenders must document and verify borrowers’ income with the IRS.
The existing mortgage was originated on or before January 1, 2008;
Existing mortgage payment(s) as of March 1, 2008 exceeds 31 percent of the borrowers gross monthly income;
The homeowner did not intentionally default, does not have an ownership interest in other residential real estate and has not been convicted of fraud in the last 10 years under Federal and state law; and
The homeowner did not provide materially false information (e.g., lied about income) to obtain the mortgage that is being refinanced into the H4H mortgage.
Duration:
The program will begin October 1, 2008 and will finish on September 30, 2011.
How does the Program Work?
There are four ways that a homeowner could pursue participation in the Hope for Homeowners program
1. Homeowners should contact their existing lender and/or a new lender to discuss how to qualify and their eligibility for this program.
2. Servicers working with troubled homeowners may determine that the best solution for avoiding foreclosure is to refinance the homeowner into a new special H2H loan.
3. Originating lenders who are looking for ways to refinance potential customers out from under their high-cost loans and/or who are willing to work with servicers to assist distressed homeowners.
4. Counselors who are working with troubled homeowners and their lenders to reach a mutually agreeable solution for avoiding foreclosure.
Besides working with their current lender this H4H program includes the following provisions as well:
- The new 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 MortgageInsurance 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.
What should you do next?
If you are threatened by possible foreclosure you should find good professional foreclosure help. You may schedule online your FREE Foreclosure Consultation here . The experts will guide you through the whole process including negotiation with current lender and/or arranging other - Hope for Homeowners Program solutions.
The final list of all participating lenders is not ready yet. As soon as it is officially announced we will publish it here. Stay tuned and subscribe to our newsletter or rss feeds.
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