New U.S. program offers "Hope for Homeowners"

The program is designed to stop foreclosures by getting homeowners
into a loan they can afford

The Federal Government has launched a major program to help homeowners who want to stay in their homes, but can’t afford their mortgage. The Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD), have created a program called “Hope for Homeowners.”

Homeowners having trouble paying their mortgage may be eligible to refinance into FHA-insured mortgages they can afford.

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The program officially began on October 1, 2008. If you can’t afford your mortgage, call your lender and a HUD-approved counselor now.

Am I eligible?

To be eligible for this program, you must:

Live in the home
Have gotten your current mortgage on or before January 1, 2008.
Have a monthly mortgage payment that is more than 31 percent of your total monthly income, as of March 1, 2008.
Certify that you have not intentionally missed mortgage payments, and did not obtain the existing loan fraudulently.
Not be an investor or speculator. If you own a second home, you are not eligible.

What would my new mortgage look like?

30-year, fixed rate mortgage;
Maximum 90 percent loan-to-value ratio;
No prepayment penalties;
$550,440 maximum mortgage amount;
Extinguishment of any subordinate liens; and
New appraisals from FHA-approved appraisers.

What are the fees and costs?

Borrowers will pay an upfront premium of 3 percent of the original mortgage amount and an annual premium of 1.5 percent of the outstanding mortgage amount. Any additional costs will be reimbursed by Fannie Mae and Freddie Mac.

How do I start the process?

Contact your lender and make an appointment with a HUD-approved counselor. If you qualify for the program, the HUD-approved counselor will assist you in getting the new loan.

What happens to my current mortgage?

FHA will get you a mortgage for 90% of the current value of your home. The current value of your home is what it is worth now, not what you paid for it. To participate in the program, your lender must accept this amount as total payment for your current mortgage. Your lender accepts the difference as a loss. A lender will often agree to this to avoid having to foreclose.

Do lenders have to participate in this program?

No. The program is completely voluntary for lenders, investors, loan servicers, and borrowers.

How long will the program last?

The program started October 1, 2008 and ends September 30, 2011.

For more information, contact HUD at (800) 225-5342