The HOPE for Homeowners program helps distressed borrowers refinance into affordable, government-back mortgages insured by HUD's Federal Housing Administration (FHA). The program runs from October 1, 2008 until September 30, 2011.
Rights and Obligations When Participating in HOPE for Homeowners
On June 10th, 2011, HUD issued Mortgagee Letter 11-20. The letter provides instructions as to how to process cases during the phasing out of Hope For Home Owners (H4H) program. This program was authorized under the Housing and Economic Recovery Act of 2008. This program is still effective for endorsements on or before September 30, 2011.
There are several ways you may learn about qualifying and participating in HOPE for Homeowners. You can discuss HOPE with your existing lender to see if you qualify, but you can also discuss HOPE arrangements with a new lender. If you are working with a loan counselor, HOPE may be suggested as an option. No matter how you learn about HOPE for Homeowners, there are several requirements, rights and responsibilities you should know before committing to refinancing with an FHA home loan under the HOPE program.
One important qualifying factor in the HOPE program is the status of your default. There are many stories in the news about people in variable rate mortgages who could not afford the payments when the interest rates increased; some of those news stories are about people who simply walked away from their homes. If you are interested in the HOPE program, do not intentionally default on your existing mortgage. If you simply can't make the payments, your likelihood of being accepted for a HOPE program refinancing loan is good as long as you meet the other qualification criteria. Walking away from your mortgage disqualifies you from HOPE.
DATE OF THE CURRENT MORTGAGE
If your home loan originated before March 1, 2008, you may be eligible for a HOPE refinancing loan.
PAYMENTS ON THE EXISTING MORTGAGE
You must have made at least six payments on your old mortgage to qualify for a HOPE refinancing loan.
COST OF YOUR CURRENT MORTGAGE PAYMENTS
Are your payments as of March 1, 2008, greater than 31% of your gross monthly income? If so you may qualify for HOPE. Gross monthly income is the amount you make before taxes, so be sure to use the pre-tax amount on your monthly pay statement when trying to figure out you debt-to-income ratio.
OBLIGATIONS UNDER THE HOPE PROGRAM
When you are approved for a HOPE refinancing loan, you are obligated to:
A 3% mortgage insurance premium
A 1.5% annual premium on the loan.
Equity sharing with the FHA. The amount of equity you must share with the government is described HERE (link to the equity sharing article).
Furnish copies of your tax returns from the last two years to confirm your income. A new appraisal of the property is required and can't be older than three months at the time of closing the HOPE loan.
RIGHTS UNDER THE HOPE PROGRAM
When you qualify and accept a HOPE loan, you have the right to re-sell your property. You must share equity with the FHA, but if you don't have any accrued equity in the property, you are not obligated to compensate the government. In other words, you're not held liable if the property doesn't show a profit or simply breaks even. Under HOPE, you also have the right to have a non-occupying co-signer on your loan. It's important to make a distinction between a co-signer and a co-borrower. Under HOPE, you are not allowed to have a non-occupying co-borrower on your loan.
If you have a non-occupying co-borrower listed on your old mortgage, that person is required to give up their claim on the property before you can accept a HOPE loan. If you think you need HOPE refinancing, don't delay. Talk to your existing lender or find a new lender willing to help you as soon as possible. HOPE for Homeowners is currently scheduled to end September 20, 2011. No new applications will be accepted after that date unless further changes are introduced to the program.
If you want to refinance your home mortgage using an FHA refinancing loan, it's important to understand a few facts at the start of the application process. FHA refinancing is different than the FHA HOPE for Homeowners refinancing program.
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