|
Fact Sheet: FHA to Provide Assistance to Struggling Homeowners
CLICK FOR FULL BILL
The President has signed into law legislation that will allow HUD's Federal Housing Administration (FHA) to continue providing targeted mortgage assistance to homeowners. The Hope for Homeowners program will continue FHA's existing and successful efforts to provide aid to struggling families trapped in mortgages they currently cannot afford. Under the program, certain borrowers facing difficulty with their mortgage will be eligible to refinance into FHA-insured mortgages they can afford. The program will be implemented on October 1, 2008.
Sustainable, Affordability Homeownership Click To Contact
Hope for Homeowners maintains FHA's long-standing requirement that new loans be based on a family's long-term ability to repay the mortgage. FHA only allows owner-occupants to be eligible for FHA-insured mortgages. Borrowers must also meet the following eligibility criteria:
- Their mortgage must have originated on or before January 1, 2008
- Their mortgage debt-to-income must be at least 31 percent
- They cannot afford their current loan
- They did not intentionally miss mortgage payments
- They do not own second homes
Features of FHA-insured loans under the new program include Click To Contact
- 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
- New home appraisals from FHA-approved appraisers
HUD, Treasury, FDIC and the Federal Reserve will form the Congressionally-mandated Board of Directors and work together to establish additional program standards.
Voluntary Lender Participation Click To Contact
FHA will continue to offer lenders an alternative to foreclosing on borrowers. Similar to FHASecure's recent expansion, lenders will be encouraged to write-down the outstanding mortgage principal balances to 90 percent of the new value of the property. In many cases, reductions in principle will cost lenders less than the losses associated with foreclosure.
Funding Click To Contact
FHA will insure up to $300 billion in new loans. 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 incurred by FHA will be reimbursed by Fannie Mae and Freddie Mac.
Program Timeline Click To Contact
The program will last from October 1, 2008 through September 30, 2011.
Additional Information
Prohibition on second liens: borrowers are prohibited from taking out new second liens on the property for the first five years of the mortgage, except as the Board determines to be necessary to ensure the maintenance of property standards; and provided that such new outstanding liens (A) do not reduce the value of the Government’s equity in the borrower’s home; and (B) when combined with the mortgagor’s existing indebtedness, do not exceed 95% of the home’s appraised value at the time of the new second lien. Click To Contact
Equity and Appreciation (Sec. 257(k)) – requires borrowers to share equity and any future appreciation in the value of the property with the Federal Government through the following: (1) the Secretary and borrower share equity created from any sale or disposition or subsequent refinancing according to a 5-year phase-in schedule; (2) upon sale or disposition of the property, any appreciation in the value of the property must be shared equally between the Secretary and the borrower. Click To Contact
Documentation and verification of income required through income tax return transcript or copy of tax returns. Click To Contact
Term of mortgage: 30-year, fixed-rate. Click To Contact
Maximum loan limit = 132% of the dollar amount limitation in effect for 2007 under the FHLMC Act. Click To Contact
The mortgagor shall not have been convicted under any provision of Federal or State law for fraud during the 10-year period ending upon the insurance of the mortgage under this section. Click To Contact
Primary residence: the mortgagor shall provide documentation satisfactory to prove that the residence covered by the mortgage is occupied by the mortgagor as the primary residence, and that such residence is the only residence in which the mortgagor has a present ownership interest. Click To Contact
Appraisals must be based on the current value of the property and meet standard appraiser requirements. Click To Contact
Sec. 257(e) – All of the following requirements must be met:
Lack of capacity to pay existing mortgage: borrowers certify that they have not intentionally defaulted on the eligible mortgage or on any other debt (false statement = fine and/or 5 years in prison); mortgagor agrees in writing that the mortgagor shall be liable to repay the FHA any direct financial benefit received as a result of misrepresentations made in the certifications and documentation requirements. DTI ratio > 31% as of 03/01/2008 (or such higher amount as the Board may determine). Click To Contact
Required waiver of all prepayment penalties and fees. Click To Contact
Principal obligation amount to be insured not to exceed 90% of the appraised value of the property, and must be determined by the reasonable ability of the borrower to make the mortgage payments as determined by the Secretary or by any other underwriting standards established by the Board. Click To Contact
Extinguishment of all subordinate liens on the property. All holders of the outstanding mortgage agree to accept the proceeds of the insured loan as payment in full, and all encumbrances are removed. The Board may establish standards for, and the Secretary may take action, as may be necessary and appropriate to facilitate coordination and agreement between holders of the existing senior and subordinate mortgage. Also, permits second lien holders to share in FHA’s portion of shared appreciation in the property secured by the eligible mortgage, pursuant to policies and standards established by the Board.Click To Contact
Contact our expert Bank workout specialists by telephone at 561 452-5963 for more information or fill out the form below and we will contact you. WE ARE HERE TO HELP YOU.
Please fill out this form for Help on the Hope For Homeowners Program
Thank you someone will get back with you as soon as possible |
