Federal Hope For Homeowners Program Provide Limited "Hope" to Householders Facing Foreclosure

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The Hope Mortgage Program Has Not Provide Hope to Homeowners

In response to the foreclosure crisis, Congress under the Bush Administration voted for the Hope Mortgage for Homeowners initiative ("Hope", also referred to as "H4H") that was designed to help people who owe more than this homes are worth to refinance to more affordable 30-year fixed-rate mortgages insured by the government.

Although the Hope Mortgage software is better as opposed to "a poke in the eye with a sharp stick", it offers limited hope to limited homeowners, and comes with many strings attached. In fact, according to Secretary of Housing and Urban Development (HUD), Steve Preston, the Hope bill is viewed as a failure because it is too steep and onerous for lenders and borrowers alike.

Banks Are Not Cooperating With the Hope Program
First, buyers need to be aware who there is no "right" to the present program. The tool is based on banks "voluntarily" participating in it. In other words, a bank ought to only participate if it determines on a case by case basis that it is in its own financial best interest to do so. The homeowner's interest is not a factor.

To date, the banks apparently do not believe the Hope Mortgage initiative is in this perfect financial interests. According to Peyton Herbert, director of foreclosure services at HomeFree USA, a housing counseling firm in Hyattsville:

"Getting the lenders to agree has been our biggest challenge". "They want dollar for dollar what's owed on that loan or somewhat end to it. That's the fly in the ointment."

Under the Hope Mortgage Program Homeowners Must Share Equity and Appreciation Ownership Interests with the Federal Government
Borrowers who participate in the program must not merely pay hefty fees, they must share equity and appreciation in the house amidst the federal government. This is how it works.

The Hope program involves a FHA approved lender stepping in and agreeing to re-finance the home. The existing mortgage company have got to also are in agreement to accept a loss on its bankrolling by accepting 96.5% of the fresh market value of the home.

a) Equity Sharing with FHA
Reducing the funding on the residential structure to 96.5% of the current market value leaves approximately 3.5 equity, of that 100% belongs to the FHA, not the homeowner, during the first year. FHA ownership interest in the equity comes down incrementally to 50% over the subsequently 5 years and at that time remains at 50%.

b) Appreciation Sharing with FHA
In addition, as the home appreciates in value over the following years, the homeowner must share 50% of the appreciation amongst FHA. Hence if the home appreciates $20,000.00 over ten years, $10,000.00 of the appreciation belongs to FHA. The 50% sharing of appreciation with the FHA is permanent and does not dwindle in time.

Hope Mortgage Has Onerous Cost Burdens on the Borrowers
The homeowner must pay upfront for financial insurance of 3% of the refinance amount, and then an annual premium 1.5% payable with the banking monthly payment.

Hence a Hope Mortgage refinance bankrolling involving a $350,000 mortgage will involve an upfront insurance premium of $10,500.00, and then $5,250.00 a year thereafter. The annual premium ($437.50 per month in this example) will be included in the monthly payments.

Hope's Mortgage Homeowner Qualifications Apply To Limited Homeowners
Some of the qualifications for a homeowner are:

1) The real estate to be refinanced is a 1-unit primary residence,
2) The homeowners has no ownership interest in any other residential true estate,
3) The existing mortgage was originated on or before January 1, 2008, and the borrower has assembled at least 6 payments on it,
4) The current monthly mortgage payments exceed 31% of homeowner's gross income as of March 31, 2008,*
5) Homeowner is unable to pay the existing mortgage(s) without help,
6) Homeowner must certify the they have not been convicted of fraud in the past 10 years or intentionally defaulted on such a debts,
7) Homeowner have got to certify that properties did not willingly provide material false information to obtain their existing mortgage(s) (i.e. did not misrepresent their income or supplementary arrears income information on the banking application)
8) Homeowner provide two-years of financial records
9) Homeowner must provide proof of income
10) Homeowner's arrears to earning ratio should be at or below 31/43

*The requirement that the mortgage payment must exceed 31 per cent of a borrower's income as of March 2008, excludes homeowners who have since gone down to trouble.

Sources in the mortgage economic indicate very few if any Hope loans experience gone through. If you have any experience with a loan under the program or with applying for assistance under the Hope program, please let us know and tell us up your experience at the author's web site noted below. We are also interested in hearing up your experience with loan trasformation and/or foreclosure.

Banks are not as helpful to homeowners as properties profess to be. They are becoming out for the interests only. Despite the federal bail out of banks, properties "want dollar for dollar what is owed on that loan"

How to Obtain the Bank's Cooperation
Obtaining banks' cooperation requires a carrot and a stick, but primarily, a BIG STICK. You may hold a "big stick" by contacting a lawyer to see how type of claims you may have against the lender. There are a total number of argues or foreclosure defenses that exist.

For model often homeowners' interest papers contain inaccurate information on loan value and a good amount loan terms that violate the Truth in Lending Act and other lending laws. In many cases, lenders and/or their realtors intentionally misrepresented the loan terms or involved in other fraudulent conduct in order to sell this loans. Some banks do not have possession or an assignment of the original note and hence have no standing to foreclose on the homeowner.

Depending on the realities of each case, there are a variety of possible claims that may give the homeowner the BIG STICK they need to obtain the bank's "cooperation". With a lawyer involved, the banks are further apt to be more "cooperative" than they have continued under the Hope program.

Too many families wait until foreclosure is inevitable (the day or week before the sale), or until properties are penniless. Don't do this! You will be able to lose your home.