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November 21st, 2008

HUD Improves Hope for Homeowners

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After an unsuccessful start and poor future projections, the Department of Housing and Urban Development (HUD) has made changes to their Hope for Homeowners Act (H4H) in order to reduce costs for both lender and borrower, expand eligibility, and lower borrowers’ monthly payments.

“Clearly, meaningful changes were needed. These modifications should increase lender participation and help more families who are having difficulty paying their existing mortgages, but can afford a new affordable loan insured by HUD’s Federal Housing Administration,” said [HUD Secretary Steve] Preston.

The changes include increasing the loan to value (LTV) to 96.5% for some H4H loans. The increase is designed to expand the number of eligible borrowers, and minimize loses to primary lienholders. The second change, and perhaps the most significant, is that immediate payments will be made to secondary lienholders (second mortgage and home equity lenders) in exchange for releasing the lien. A major road block that had stalled this program since its implementation was the subordinate lienholder’s unwillingness to release the lien because there was no guarantee of any return, and then not even until the home was sold at some point — perhaps years from now. With the new changes, subordinate lienholders will receive payments once the H4H loan is originated. Lastly, borrowers now have the option to extend the yearly period of their loan from 30 to 40 years. By increasing the loan term, many borrowers can experience a reduction in their monthly payments.

Some eligibility requirements for the new changes include: the mortgage must have been originated on or before January 1, 2008, borrowers can not own a second home, strict adherence to the FHA’s policy of “fully documented income and employment,” and a loan amount that does not exceed $550,440.

Interested? Be sure to read all the details and requirements for the changes to H4H on HUD’s website.

On a separate note, Christmas cheer must truly be in the air as Fannie Mae and Freddie Mac announced yesterday they plan to suspend foreclosures until January 2009, while their new “streamline” foreclosure-assistance plan is implemented.

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2 Responses to “HUD Improves Hope for Homeowners”

  1. MortgageGuy Says: June 4th, 2009 at 12:42 pm

    This program has been a total flop. It was a good idea but never made it into reality. Lenders do not like taking over bad loans.

  2. Tim Manni Says: June 4th, 2009 at 1:34 pm

    MortgageGuy,

    A “total flop” is putting it gently.

    I saw you had a story on your site about the first-time homebuyer tax credit as a downpayment. We also have a story on the subject, and man was it interesting following that story and updating it for like two weeks.

    Great hearing from you and we hope to hear from you again soon, thanks for commenting, I’ll be checking in on your blog,
    Tim

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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