Hope for Homeowners mortgage assistance.
The Hope for Homeowners program was created by the Federal Housing Administration (FHA) to help deal with the sub prime mortgage crisis. It helped hundreds of thousands of Americans refinance their home loans and in effect save their house from a foreclosure. Get details on the Hope for Homeowners program.
While the program has ended, the government put more focus on rolling out this service to struggling families. It is estimated that more households threatened by a foreclosure can get help from it. In effect, it was a solution to high priced predatory loans.
What does Home for Homeowners do?
As one example of what may offered, you can now slash your second-mortgage interest rates to as low as 1% for five years. This is available for some income qualified homeowners. In addition, the program now seeks to revive a Federal Housing Administration loan modification effort to help persuade banks and lenders to reduce loan balances enough so that borrowers again have equity in their homes and thus have options.
The revised plan will provide cash incentives and also government backed grants to many businesses as well as lenders to encourage them to help borrowers. This additional compensation should be an incentive to enroll people in the Hope For Homeowners Service.
As an example of what is being provided, a loan officer or banker would receive up $500 upfront, plus they can get up to $250 a year, for up to 3 years, for working with the homeowners. The payment will be made to the officer as long as the mortgage remains current. Financial help is also provided to homeowners from this mortgage assistance program. Borrowers who pay their mortgage on time will receive $250 a year for as many as five years.
In addition, this new plan also would allow bankers and lenders the option of asking the federal government to buy second mortgages at pennies on the dollar, thus eliminating homeowners' obligations to repay the loan However Treasury officials said they expected reductions in interest rates be a much more popular option over a buyout.
Terms of the Hope for Homeowners program
This change is providing new life to the FHA service. With the recent announcement of changes to the federal governments Hope for Homeowners mortgage assistance program it is expected that more foreclosures will be averted. Most of the aid provided allows borrowers who are underwater to lower their loan balances by using a number of modification options.
Now, mortgage holders and homeowners may get their principal reduced. This resource is available for people who are attempting to renegotiate an interest rate reduction, and it applies for borrowers of all income levels. The reduction in balance is available through the federal government program. All lenders will now be required to evaluate whether borrowers and homeowners are eligible for a mortgage write-down on the principal amount owed through Hope for Homeowners program.
New refinancing and modification options
The highest dollar amount that could be refinanced was 105% of the appraised value of the house. However the FHA's Hope for Homeowners program may make some exceptions based on the homeowners personal situation.
Compare that to what was happening today with the current program. Under the original Making Home Affordable federal program a homeowner with a $120,000 mortgage on a home now worth $100,000 would not have been able to qualify for loan refinancing because the debt is 120% of the home's value which was above the 105% maximum limit. So there was in effect a cap that was strictly enforced.
Now, using the example above, under the newly revised Hope for Homeowners program, the homeowner may be eligible for a modification. The dollar thresholds have changed. So the borrower may be given a new refinanced loan of an amount of say $96,500. Then the bank or lender would take the loss of $23,500.
Phone number
For more information on the FHA Hope for Homeowners program, dial (800) 225-5342. Referrals will be provided to a local counselor.
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