HOPE FOR HOMEOWNERS
NEW PLAN TO REFINANCE INTO A FHA MORTGAGE FOR THE "ACTUAL" APPRAISE VALUE OF YOUR HOME
You will not owe any payments, fees, penalties or other debt on your existing mortgage(s)

Update: On January 7,2009 the Board of Directors of the HOPE for Homeowners Program make several changes to the section 257 of the National Housing Act ( HOPE for Homeowners Act ). The changes are designed to improve the program increasing the number of homeowners that can benefit and also providing incentives to the lenders and lien holders therefore motivating them to participate in the program.

Due to the low success rate of the program ( in mid-december there were just 300 applications open) the government decided to modify the program to make it more attractive to lenders and more attainable to homeowners. The main changes for the Hope for Homeowners Program are:

1). It will expand to include 2 to 4 unit properties ( before just “single family residences” were included)

2). It will provide the option of an “upfront payment” in lieu (instead) of future appreciation to a holder of an existing subordinate mortgage

3). It will increase the maximum tern of the program mortgages to 40 years ( Before it was 30 years)

4). Increase the allowable Loan to Value Ratio up to 96.5% ( it was 90%)

5). Increase the allowable Debt to Loan Ratio up to 38% ( it was 31%)

6). Modify the equity sharing for homeowners that already have equity in their homes

Below you can read the information about the program. Please be aware of the new changes.

This new program started on October 1st, 2008 and will be in effect until Sept 30, 2011. The program is called Hope for Homeowners (H4H).

The program ( HOPE for Homeowners ) seeks to help homeowners that have their house at risk of default and foreclosure to refinance into more affordable, sustainable FHA mortgage or loan. The government expect to benefit at least 400,000 homeowners.

How the Program Hope for Homeowners ( H4H ) Works?

The HOPE for Homeowners program works like this: your actual mortgage and its related debt will be “refinanced” and you will be given a NEW FHA Mortgage for up to 96.5% of the appraised value of the house.

In exchange for the "pardon" of your house-related-debts you agree to share the appreciation and equity with the FHA in the future. The FHA on its part will share that appreciation with the lenders that are "pardoning" your debts...

If you bought your house for $200,000 and due to the real estate meltdown your house is now worth $100,000, your new mortgage will be for $96,500 or less.

But what happen to the difference?, If you were or are late in your payments what happen to the late and penalty fees? If you have a HELOC or several liens on the house what happen to them?

The Hope for Homeowners program establishes that the lender(s) will HAVE TO “waive” all debts in excess of the new mortgage value ( in our example everything over $96,500)

In exchange of this new lower more affordable mortgage that reflects the actual home value, the homeowner HAVE TO agree to share the future appreciation of the house with the FHA and the holders of the liens ( actual lender or lenders and those that are waiving the debts)

Who Qualify for the Hope for Homeowners Program?

To see if you pre-qualify for the Hope for Homeowners answer the following questions. If you answer YES to all of them, you MAY qualify.

1. Did you get your fixed rate mortgages before January 1,2008? or ARM Mortgage befor March 1, 2008?
2. Is your Mortgages Paymetn more than 31% of your gross income? ( Montlhy Mortgage Payment X 100 )÷ Monthly Income
3. Is this house your main and only residence ? ( 2-4 unit homes are including after January 9,2009)
5. You have NOT been convicted of fraud in the last 10 years?

What will You Get if you Refinance using the Hope for Homeowners Program?

A NEW FHA Hope for Homeowners Mortgage.   You will get to keep your house

The new mortgage will be the ONLY one lien or debt that you will have on your house.  All fees  (late, penalties, legal, etc) will be waive.  Also if you have other mortgages or liens they will be paid off with future appreciation. Adjust January 9: the HUD may paid them off in the present.

Your ne FHA backed mortgage will have the following characteristics:

1. FIXED Rate Mortgage
2. A term of UP to 40 years (change made on January 9)
2. A value of up to  96.5% of the appraised value of your house, including mortgage insurance (change made on January 9)
3. A monthly payment of up to 31%  of your monthly gross income (change made on January 9 allow up to 38%)
4. A Future Appreciation Share Provision

What are the Closing Cost and Prepaid Items of the Hope for Homeowners Program?

The government has also outline the rules for the cost for homeowners applying to this program. You should compare your cost to the ones below and make sure that they match

- Maximum 1% origination fee
- Mortgage Insurance Premium of 3% of the mortgage
- The government does NOT allow the lender to charge more money to cover other “administrative fees” ( application fees, broker fees, etc)

Since the maximum mortgage is 96.5% of the appraised value you may need to prepaid some required items or you can put them in the mortgage if possible.

Remember that if you refinance your home through this program you will not owe any payments, fees, penalties or other debt on your existing mortgage(s).

How to apply for the Hope for Homeowner Loan:

Do It Yourself :

Update: with the new changes introduced on January 9 the process became much more complicated but also easier to get. There is the need of some negotiation between the HUD and the second lien holders (sort of short sale process but more complicated). I don't think it is even possible. But just in case here you have the original instructions

1. Contact your lender and ask them if you qualify for the Hope for Homeowner Program. They should tell you what the eligibility criteria are.
Check your mortgage documents to see who the actual owner of your mortgage is. Due to the mortgage meltdown and financial crisis many of us change of lender ( My payment slip has change name already 3 times)
Click here to see a List of Mortgage Lenders , their contact information and some questions that you will need to answer ( be ready when you call them). If your mortgage lender doesn't know or don't work with the HOPE for Homeowner program you should contact a HOPE NOW agency, a servicer or start shopping for a bank that works with the program.

I will be publishing the official docs that you are require to sign and the disclosures that they must show you so you can work with a servicer.  The servicer will deal directly with the bank and you can will control that the process is working.
You can ALWAYS negotiate with the servicer or broker their fee.  You should pay only if your mortgage is modified. 
I am giving you the list of the free agencies but don’t be afraid of paying a private agency if they are offering a better program and taking care of your business.   

Getting Help from a Servicer (Broker):

You can use a servicer or agency to help you apply to the Hope for Homeowners.  Since they work with many programs they can also let you know if you qualify for other programs from the government, private from the banks or advise you about other options that you may have.   The Hope for Homeowners is one of the hardest programs to get and it may no be available to you even if you qualify ( Remember is UP TO the bank or lender to waive your debt).

We can refer you to a private servicer ( Disclosure: we get a referral fee ) and to a government one. Please fill out the form on the right and one of the servicers will contact you. You will also see the list of the ones approved by the HUD and Hope Now Alliance.

This time please read all the information about the programs so you can ask more questions and see if the plan that you are getting is the hope for homeowners or a better or at least convenient for you. Also check this website constantly and compare what the servicer is telling you with what we are saying about the program.

Help from Originating Lenders:

Those are the banks and lenders who are looking for new customers and are working with the H4H programs. Those lenders are looking for potential customers that have old high-cost loans. The best way to reach this lenders is using a servicer or broker
You can look for this lender calling them directly ( please click here for a list of mortgage lenders) , visiting one of their offices and asking for the program or again you can fill out the form in our website and we will contact you with a servicer. You can also click on one of the ads that you see in our website.

Counselors:

You can also contact counselors who are working with troubled homeowners and their lenders to reach a mutually agreeable solution for avoiding foreclosure. We have a list of the approved Hope Now Agencies in your state, you will se the list after you filled out the form.

Is it better to go with a FREE Hope Now Agency ( HUD approved agency) or a PRIVATE Agency?

Pros of Free Agency:

1. They are Free
2. They don’t have any interest in lead you to a specific program or lender
3. They can help you with other needs you may have ( credit counseling, etc)
4. They work with all the government programs
5. They (usually) have people that care and want to help you

Cons of Free Agency:

1. More people go to free agencies and they are usually very busy
2. They have limited budgets and limited tools to help you
3. They are limited to government programs
4. They work with volunteers and the chances of errors are higher
5. They don't get any incentive whether you get a new mortgage or not
6. They take longer and may affect your chances to get a mortgage on time to save your home
7. They don’t care if you complaint or push them because they are free

Pros of Private Agency:

1. They have an economic incentive to get you help quickly
2. They make more money if you get a new loan/mortgage
3. They have  employees with experience (not always) and make less errors
4. They use the latest technologies to process your mortgage quickly
5. They are more rational and can tell you what’s better for your finances
6. They have access to government , private and bank programs
7. You can sue them or complaint if they make mistakes

Cons of Private Agency:

1. They cost money
2. Some are very good and some are not – You need to be vigilant
3. Some will charge money up front
4. They have an economic incentive to lead you to the program were they make the most money

A non-profit agency has its advantages and disadvantages and so do a private agency.  Don’t choose one over the other just for the price.  If you choose a private agency be vigilant and follow the process.  Also check if what they are offering is true ( ex: if they say that you qualify for  the Hope for Homeowners for your 2nd home you know they just want your money)
Ask for names of happy customers and pay just if they are successful.

If you choose a Hope Now approved agency ask what their success rate is, find out if they have work with your bank.  Ask if you will be assign to a single counselor and how you communicate with him/her .  Since you are not paying make sure that you like the person working in your file ( and that he/she likes you back).  Ask for name of happy customers too.

Should you go for a Hope for Homeowners Program Loan?

Before you start calling everywhere asking for the Hope for Homeowners ( H4H) program you need to understand that the new mortgage that you get is not a regular FHA Mortgage. The new mortgage, call FHA HOPE for Homeowners Mortgage has several conditions and restrictions that you need to agree to:

1). In the future, when you sell or refinance your home you will share the equity and appreciation of the house with the Federal Government (See table here)
2). You cannot take out a second mortgage, home equity loan, or home equity line of credit for the first five years
3). You have to pay a Mortgage Insurance Premium
4). Your new mortgage cannot be for more than 96.5% of the appraised value of the house

On January 9 the government modified the program to make it more appealing to the lenders. I believe homeowners are already sold. The Hope for Homeowners is the best program that the government has and it is being improved. In fact on March 9 the government will make some comments and improvements if needed.

If you read the information we have here in Hope Now Mortgages and you believe that you qualify for this program you should also read the other programs that the government has. Some banks also have their own programs and you should consider them also.

If you qualify for the programs it doesn’t mean that you will get it. You need several thins:
1. The bank or lender holding your mortgage must participate in the Hope for Homeowner Program
2. Your lender must agree to give you a Mortgage from that program (If the lender has a program that is more profitable for them that the H4H, they won’t offer you the H4H)
3. The owners of the junior mortgages ( helocs, etc) must agree to waive the debt. This is the hardest part and it’s subject to negotiations.

If you don’t get the hope for homeowners you can get the Streamline Modification Program. This program is better for the banks because they don’t need to forgive any debt and it’s also good for you because they will give you a low mortgage payment. They are allow to do whatever it’s necessary to lower your payment.

For now the Hope for Homeowners is a work in progress. The government is making adjustment and inviting banks to work with it. It is also making revisions and it’s asking for our comments in how to improve it.

If you want to submit your comments about how to improve the program you can send them a letter to:

Office of the General Counsel
Department of Housing and Urban Development
451 Seventh street, SW. , room 10276
Washington, DC 20410-0500

Ref: Docket No B-2009-F-03
HOPE for Homeowners Program: Program Regulations : Upfront Paymnent Incentive for Subordinate Mortgage Lien Holders and Other Program Changes.

Forms and Communications from the Hope for Homeowners Program:

Please click in the item you want to read.

* Facts about the Hope for Homeowners Program
* Consumer Disclosures for the hope for Homeowners Program
* Information for Lenders about the hope for Homeowners Program
* Initial Regulations of the hope for Homeowners Program (pdf)
* December 2008 Report
* "Fictitious Example" of the Hope for Homeowners (before update) 

HOPE FOR HOMEOWNERS
FREQUENTLY ASKED QUESTIONS FOR CONSUMERS

What is the HOPE for Homeowners Program (H4H)?

This new program, created by Congress, is intended to help borrowers at risk of default and foreclosure refinance into more affordable loans.

How can the H4H program help me?

If you are having trouble making your mortgage payments, this program may allow you to refinance your loan into a new 30-year fixed rate loan with lower payments.

Do I have to pay anything to apply?

There will be closing costs associated with HOPE for Homeowners loans; however, they may not be required to be paid out of pocket by the borrower. Please consult your lender or a HUD-approved Housing Counselor for more details. To find a FHA-approved lender or HUD-approved Housing Counselor, please contact us filling the form. You can also click on the ads that our advertisers that are FHA approved.

How long will the process take?

Processing time will vary, but usually takes approximately 60 days. Please consult your lender when you apply.

What information do I need to apply?

Your lender is in the best position to answer this question based on your specific situation, but at a minimum you will need evidence of your income and assets, as well as your current mortgage information.

How long is the H4H program available?

The program began on October 1, 2008 and will end on September 30, 2011.

What interest rate will I receive?

The interest rate for the new H4H loan will be provided by the lender and is based on current market rates.

I don’t want another adjustable rate mortgage. Will this interest rate be fixed or adjustable?

All HOPE for Homeowners loans are 30-year FIXED RATE mortgages insured by the Federal Housing Administration (FHA).

I contacted my lender and they are not interested in participating in this program. What can I do?

You may apply with any FHA-approved lender who is participating in the program. You may also consult an approved housing counselor. HOPE for Homeowners is a voluntary program for both borrowers and existing lenders. In order to complete a HOPE for Homeowners loan, however, your lender must agree to accept the proceeds of the new loan as payment in full. For further assistance you may wish to consult an approved counselor. For a list of participating lenders and counselors please follow the form. You will see the list of counselors immediately. We can also refer you to a FHA approved lender or you can click on the ad of one of our advertisers that is approved.

Eligibility questions

My lender has started foreclosure proceedings. Can I still apply for H4H?

Yes, however, time is of the essence.

Is there an income restriction?

No, but you will need to demonstrate that you have sufficient, steady income to make the new H4H mortgage payments.

I recently filed for bankruptcy. Am I still able to apply for H4H?

Yes, borrowers in bankruptcy may participate; however, you will want to consult with the person handling your bankruptcy.

My lender has already foreclosed on my home. Can I still apply for H4H?

It may be possible depending on which stage of the foreclosure process you are in. You should talk to your lender immediately for more detailed information.

I have a first and second mortgage on my home. Can I still apply for H4H?

Yes, however, all your existing lenders must agree to release the liens against your home.

I am current on my mortgage. Can I apply for H4H?

Yes.

I can’t reach my lender and I would like to apply. What should I do?

You may contact any participating lender to apply. For a list lenders please fill out the form and we will put you in contact with a servicer or click on the ad of one of our FHA approved advertisers.

My lender is not registered and I would like to apply. What should I do?

You may contact any participating lender to apply. For a list lenders please fill out the form and we will put you in contact with a servicer or click on the ad of one of our FHA approved advertisers.

Counseling questions

I am not clear on what to do. How do I decide if this is the right choice for me?

You can contact a HUD-approved Housing Counselor in your area. They can help you evaluate the different options that may be available to you, and help you determine your best course of action. You can locate a counselor in your area by filling out the form. You will see immediately a list of counselors in your city and state

How can a housing counselor help me?

Housing counselors are knowledgeable about available programs to help struggling homeowners. They can review your specific situation, identify your options and help you make an informed decision.

Will I have to pay taxes on the portion of my loan(s) my current lender(s) “write off” or forgive?

You should contact the Internal Revenue Service ( IRS )at 1-800-TAX-1040, or your tax advisor regarding tax-related questions.

Are there any guidance for lenders or servicers on how to work with the Hope for Homeowners Program ?

We have some information for the lenders that want to generate hope for homeowners mortgage. To read some informacion click here ( H4H lenders information )