Pamela D Nickels

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702-375-7230

Hope for Homeowners 
Program

Q. What are the outlines of the new “H for H” program?

A. 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 loan.

Eligibility: Mortgages eligible for refinance must have been originated on or before January 1, 2008. Borrowers must have housing debt‐to‐income ratios greater than 31 percent (or a higher ratio set by the Board) as of March 1, 2008. 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. Borrowers are not eligible if convicted of fraud within the last 10 years. 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. Eligible borrowers may only have one primary residence.

New Loan Requirements: 30 year fixed rate loan not exceeding 90 percent of the property’s appraised value. Principal amount cannot exceed 132 percent of the 2007 Freddie Mac loan limits (i.e., $550,440). Board shall establish a reasonable limitation on origination fees. Prohibits junior liens for five years.

Write Down: Participating note holders must agree to a reduction in principal to achieve the 90 percent loan to value requirement. Prepayment penalties and fees related to default or delinquency must also be waived.

Premiums: Note holder must pay the three percent upfront premium from the proceeds of the refinance. Borrower pays 1.5 percent premium annually.

Shared Appreciation and Equity: Borrower must share newly created equity with FHA when the property is sold or the loan is refinanced. FHA’s share in the equity is reduced from 100% to 50% in 10% increments over first five years. After five years, the home owner and government each will share in 50 percent of the equity. Borrowers must also share any future appreciation 50/50 with FHA upon the sale of the property. The program’s governing Board will establish standards for sharing future appreciation owed to HUD with subordinate lien
holders.

Sunset: The program runs from October 1, 2008 through September 30, 2011.

Servicer Liability: Amends the Truth in Lending Act (TILA) to create a fiduciary duty for mortgage servicers to “maximize the net present value of the pooled mortgages in an investment to all investors and parties having a direct or indirect interest.” The duty does not supersede servicing contracts. It also would deem servicers to act in the best interests of all investors if the servicer implements a refinance or modifies a loan through the HOPE for Homeowners plan.

Q.28. How soon can we expect the program to be up and running?

A. FHA will be working with a Board established under the law to make the program operational and issue guidance by October 1, 2008. MBA conference calls will discuss this program and FHA’s ongoing program to refinance borrowers, FHA Secure.

Pam's Personal Experience

Before I got into the mortgage business, the loan process was very confusing to me. I remember those feelings of frustration and now, because of my years of experience and mortgage knowledge, I am able to guide you through the entire process with an understanding of what you might be experiencing.