HOPE for Homeowners Program Enhancements

Under the Emergency Economic Stabilization Act (EESA) of 2008, the HOPE for Homeowners Board of Directors was granted authority to make changes to the program that will provide additional mortgage assistance to struggling homeowners.

As announced by HUD Secretary Steve Preston on November 19, 2008, the Board has approved the following changes which are intended to expand eligibility, reaching more distressed homeowners, and reducing program costs for both consumers and lenders.

Increasing the Maximum Loan to Value (LTV) to 96.5%

• A borrower may now qualify for an LTV of up to 96.5%, so long as his mortgage payment to income ratio is 31% or less, and total household debt to income ratio is 43% or less.
• For borrowers with an LTV of 90% or below, the expanded ratios of 38/50 remain available.

Eliminating the Trial Modification Requirements

• FHA will no longer require a 3 month trial modification in any case.
• Eliminating the trial modification requirement simplifies the program and streamlines the process.

Expanding the Maximum Loan Term to 40 Years

• Borrowers and lenders will now have the ability to expand the loan term to 40 years.
• The longer amortization period will help reduce monthly mortgage payments.

Allowing an Upfront Payment to Subordinate Lien Holders

• Subordinate lien holders will now have the option to take their appreciation share at the time of origination of the H4H mortgage, or wait until the property is sold.
• The upfront appreciation share will be a portion of the outstanding balance depending on the Combined Loan to Value at the time of H4H origination. Consistent with statutory and regulatory requirements, borrowers must continue to meet the following criteria:
  • Their mortgage(s) must have been originated on or before January 1, 2008.
  • They cannot afford their current loan. (DTI greater than 31%)
  • They must have made a minimum of 6 full payments on their existing first mortgage.
  • They have not intentionally defaulted on any debt.
  • They do not own any other residential real estate.
  • They did not knowingly or willfully provide material false information to obtain the existing mortgage and they have not been convicted of fraud in the last 10 years.

Content Archived: April 21, 2010