Hope for Homeowners


22 Nov 2009.

Hope for Homeowners is an FHA refinancing program for underwater homeowners. On the borrower side, it required homeowners to sign a statement that they did not give false or misleading information on their original loan application, putting off many. On the lender side, it required in most cases that the original loan holder take a loss, as FHA would only insure 96.5% of the current appraised value, and few lenders were interested. From the 1 Oct 2008 rollout to Apr 2009, only 51 loans were refinanced. Further modifications of the plan were made in May 2009, but there has been no report of successful large-scale refinancings.

See also

Below are clippings used in constructing this page

Lenders not willing to take the principle reduction required by H4H

31 Oct 2008. Housing Wire.

“Questions Emerge over Hope for Homeowners. By: DIANA GOLOBAY”

“the problem sits with third-party investors that have thus far proven unwilling to take the minimum 90 percent haircut required to put borrowers into the program–losses are actually far greater for investors who participate, given that the 90 percent figure is based on a current appraisal, not original LTV. … Robert Paduano, managing director at Allegro Funding Corp., licensed to operate in 24 states and signed up on the H4H list … “It’s not going to materialize into what we had hoped for because most lenders are unable or unwilling to write down the principle balance to 90 percent because their investors won’t let them.””

H4H changed to require writedown to 96.5% of appraisal instead of 90%

19 Nov 2008. Marketwatch.

“HUD expands mortgage modification program. By Ronald D. Orol”

“Hope for Homeowners program. … will change the existing regulation adopted by HUD in July. Under the new rules, homeowners won't have to spend more than 31% of their monthly income on their house payment. For the lenders, the rules will allow them to write down a loan to 96.5% of the home's actual value, rather than to 90% as under the old rule.”

Hope for Homeowners went nowhere in 2008

17 Dec 2008. Washington Post

“HUD Chief Calls Aid on Mortgages A Failure. By Dina ElBoghdady”

“Secretary of Housing and Urban Development Steve Preston … The three-year program was supposed to help 400,000 borrowers avoid foreclosure. But it has attracted only 312 applications since its October [1st] launch because it is too expensive and onerous for lenders and borrowers alike, Preston said in an interview. …

The goal of the program, run by the Federal Housing Administration, was to allow borrowers who owe more than their homes are worth to refinance into more affordable 30-year fixed-rate mortgages insured by the government. … Congress originally allowed the FHA to insure new loans for only 90 percent of a home's value. With home prices plunging, borrowers who have little or no equity in their homes and cannot otherwise come up with the remaining 10 percent qualify only if the lender forgives this balance. Lenders balked. Late last month, Congress granted HUD permission to increase the amount that's insured and the department decided to guarantee up to 96.5 percent of the value of new loans. Preston in the interview praised that change. But its impact remains unclear. “Getting the lenders to agree . . . has been our biggest challenge,” said Peyton Herbert, director of foreclosure services at HomeFree USA, a housing counseling firm in Hyattsville. “They want dollar for dollar what's owed on that loan or something close to it. That's the fly in the ointment.” … Add to that the fact that borrowers must also provide two-years of financial records and sign a statement that they did not give false or misleading information on their original loan application and the bar gets even higher. It becomes even more difficult to attract borrowers who took out loans without verifying their income.”

51 loans to date

29 Apr 2009. Wall Street Journal pA4.

“U.S. News: Loan-Modification Plan Revised to Address Second Mortgages. Ruth Simon”

“so far, just 51 loans have been refinanced under the Hope for Homeowners program, the Department of Housing and Urban Development says.”

Another try

21 May 2009.

“Renewed HOPE for Homeowners. By Les Christie”

“The new version of HOPE … requires servicers to reduce balances to 93% of market values instead of 90%. It also pays servicers $1,000 for every Hope-refinanced loan. …

But the biggest change is that it authorizes FHA's parent agency, the Department of Housing and Urban Development (HUD), to share future home-price appreciation with investors, up to the appraised value of the property when the existing loan was first issued.

The original bill gave HUD the right to share potential profits 50/50 with homeowners, but now some of HUD's share would go to the original investors.

Also … Treasury will require any servicer that signs up to participate in the Making Home Affordable program … to evaluate borrower eligibility for Hope for Homeowners as well.

If borrowers don't fit into the Making Home Affordable program but are viable for HOPE, the servicers must offer them this option.”