27 Nov 08 Hope for Homeowners with FHA Refinancing
QUESTION: What is the new Hope for Homeowners program?
ANSWER: A new FHA refinance program with an additional $300 billion in FHA mortgage insurance authority. Under the program, borrowers unable to afford their present mortgage loans and who meet other criteria, can refinance into an FHA mortgage loan. Existing mortgage lenders who volunteer to participate agree to provide loan modifications and accept short refinancing by writing down principal to 90% of the appraised value of the property. These FHA mortgage refinance loans will be eligible for securitization with Ginnie Mae. The program is voluntary on the part of lien holders.
httpv://www.youtube.com/watch?v=HWf_mN7wTZU
QUESTION: What are the outlines of the new “H for H” program?
ANSWER: These are some of the basics according to HERA:
Reps and Warrants: Insurance benefits will not be paid if a mortgage violates the representations and warranties the program’s governing body (Board) will require or if a borrower of the new loan fails to make the first payment on the FHA mortgage.
o Eligibility: Mortgages eligible for refinance must have been originated on or before January 1, 2008.
o Borrowers must have housing debt-to-income ratios greater than 31 % (or a higher ratio set by the Board) as of March 1, 2008.
o Borrowers must certify they did not intentionally default on the original mortgage or other debts or furnish false information (five year jail time for false statements) to obtain the FHA loan.
o Borrowers are not eligible if convicted of fraud within the last 10 years.
o Borrowers’ income must be fully documented through their two most recent tax returns and other standards established by the program’s governing Board or HUD.
o Eligible borrowers may only have one primary residence.
o New Loan Requirements: 30-year fixed rate loan not exceeding 90 % of the property’s appraised value.
o Principal amount cannot exceed 132 % of the 2007 Freddie Mac loan limits (i.e., $550,440).
o FHA plans to establish fair compensation regarding origination fees.
o Prohibits second mortgages for five years.
Data sources: Mortgage Bankers Association, FHA Mortgage Lending Blog and FHA Home Loan Refinancing
Tags: FHA loan, Hope for Homeowners
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