About Government Refinance and Home Purchase Programs

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

There was an excellent article over at HousingWire.com on the recent congressional hearing with lenders about the Hope For Homeowners program that is set to launch in less than two weeks. While lenders are not jumping for joy over the prospect of writing off millions of dollars of debts indications are that they will use the program when it is the best remaining option. But they are still waiting on the FHA to release more details and guidelines before they can set their policies. Here is a quote from HUD commissioner Brian Montgomery in the article:

Part of servicers’ hesitance to provide details may be due to a lack of details surrounding the program specifics; it’s tough to say who will qualify when you don’t know what the standards will be. HUD commissioner Brian Montgomery, however, assured Congress that everything would be in place in time.

“First and foremost, we want to assure you that we are firmly committed to having the program up and running by October 1, 2008, and believe this goal is achievable,” Montgomery said to open his testimony on Wednesday.

The good news is that part of the delay seems to be that HUD is trying to figure out a way to get 2nd mortgages in on the act so they will not block the program entirely. Right now most 2nd mortgages stand to lose everything with a HOPE loan so they have no incentive to allow for the refinance.

HUD’s Montgomery also alluded to perhaps the program’s largest sticking point: second liens. “One of the greatest challenges to successful loan modifications is obtaining the consent of all existing lien holders, including the holders of junior mortgages,” he said. He suggested HUD was close to proposing rules under the HFH program that would have second lien holders share in the government’s interest in the property.

There are clearly some hurdles to overcome there but with any luck the folks at HUD will concoct a win-win program.

Not surprisingly, Montgomery also noted that the HOPE loans will have a higher interest rates than traditional FHA loans.

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