Enter your search terms Submit search form
Powered by Google™

What you need to know about HOPE for Homeowners

HOPE for Homeowners is a federal program to refinance mortgages for homeowners who cannot afford their current monthly mortgage payments and are at risk of foreclosure. The program is administered by the Federal Housing Administration (FHA) and offers a 30-year fixed rate mortgage to homeowners who are in over their head with their current mortgage.

Under the guidelines of the program, homeowners must not only be offered a fixed rate mortgage, but a monthly mortgage payment that is below 31 percent of the homeowner’s monthly income. This program is in effect from October 1 2008-September 30, 2011.

HOPE for Homeowners is only available to homeowners who meet certain criteria, such as:

• Original mortgage was obtained on or before January 1, 2008
• Homeowner cannot afford monthly payment on their current loan
• Homeowner does not own more than one home
• Homeowner’s mortgage debt-to-income ratio is 31 percent or greater
• Homeowner must have made at least six full payments on his or her current mortgage without intentionally missing any payments

 

You can learn more about the specific criteria for HOPE for Homeowners eligibility at http://www.hud.gov/hopeforhomeowners/consumerfactsheet.cfm. Your mortgage lender can also tell you if you qualify for a HOPE for Homeowners loan.

While the HOPE for Homeowners program sounds like an option for much-needed relief for many homeowners, it is important to understand that there are steep concessions a homeowner must make to obtain this loan.

First, the homeowner must agree to share the equity in their home with the FHA (equity is assessed at the time of the loan’s origination). If a homeowner decides to sell their home within 1 year of obtaining a HOPE for Homeowners loan, the FHA will receive 100 percent of the home’s equity; if the home is sold within two years, the FHA will receive 90 percent of the home’s equity; if the home is sold within three years, the FHA will receive 80 percent of the home’s equity; and so on. The percentage the FHA receives continues to go down in 10 percent increments for the first five years of the loan, after which the FHA’s percentage remains at 50 percent. So, if you decide to sell your house 20 years after you take out this loan, the FHA will still be entitled to 50 percent of your home’s equity.

Second, the homeowner must agree to share future home price appreciation with the FHA. This means that the FHA will be entitled to half the amount your home appreciates in value. So, if your home was valued at $150,000 when you obtained a HOPE for Homeowners loan and is valued at $200,000 when you decide to sell your home several years later, your home appreciated $50,000 in value; the FHA will receive $25,000 and you will keep the remaining $25,000.

If you have questions about the best way to avoid home foreclosure and bankruptcy, it is a good idea to contact an experienced bankruptcy attorney. A bankruptcy attorney should have access to the information you need to make the best choices for your particular situation.