About Government Refinance and Home Purchase Programs

Information and Updates on Government Mortgage Programs
Filed under Updates on FHA short refi program - HOPE loan qualifications

As part of the White House announcement today, news came out about attempts to revive the Hope For Homeowners (H4H) program. Hope For Homeowners was a program that was launched in late 2008 that allowed people to refinance into FHA loans at 90% of the current value of their home even if they are on the brink of foreclosure. Lenders would be required to write off losses on existing loans in cases where the value had dropped significantly but H4H was designed as a way for lenders to avoid having to foreclose on homes and lose even more money than the write off would cost. The problem was that lenders were not at all interested in writing off principal so the program was a colossal failure.

The Obama administration is this week announcing attempts to revive H4H in a workable fashion. See here from a recent article over at the WSJ on it:

The administration also announced a set of incentives for servicers and lenders participating in the

Hope for Homeowners program, which aims to restore homeowners’ lost equity by encouraging lenders to write down loan principal. The administration said it will take steps to incorporate Hope for Homeowners into its loan modification program. Servicers will be required to determine eligibility for a Hope for Homeowners refinancing and where it proves viable, the servicer would need to offer this option to the borrower.

While participation in the Hope for Homeowners program has been dismal, administration officials said they’re expecting strong investor interest as the program is wrapped into the broader federal loan modification program. The administration also said it supports legislation to strengthen the Hope for Homeowners program so that it can function effectively as a key part of the administration’s new housing efforts.

Changes to the Hope for Homeowners program are designed to place it in line with the taxpayer-assisted loan modifications. Launched last fall to help troubled borrowers refinance into more affordable government-backed loans, it has failed to gain traction due to onerous borrower requirements and the nagging problem of second liens.

The administration announced Tuesday a $2,500 up-front payment to servicers that refinance borrowers into the program. Meanwhile, lenders that originate the new loans will receive $1,000 a year for three years, if the loans stays current.

Comments (0) Posted by G.R.A. Admin on Tuesday, April 28th, 2009

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