HUD Improves Hope for Homeownersby Tim Manni
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.