Government Help for Your Mortgage

A new program was implemented on October 1, 2008. Our President has made a reality the legislation that will let HUD’s Federal Housing Administration (FHA) to continue providing help to homeowners who are having problems paying their mortgages. The Hope for Homeowners program will carry on FHA’s work to help American families who feel they are trapped in mortgages they can’t possibly pay back. Under this new legislation, certain families facing hardship with their mortgage will be eligible to refinance into FHA-insured mortgages they can afford.

Families Could Possibly Be Eligible For This Program

You should not wait if you are currently in a bind. Today you can find out if you qualify for this exciting new program through FHASecure, FHA’s existing refinancing program. They will get your information from these two agencies:

1. You must call a local, HUD-approved housing counseling agency at HUD.gov;
2. You can also call the HOPE NOW Alliance at 1-888-995-HOPE

How Can the US Government Make This Long-Term?

Hope for Homeowners isn’t a hand out. It requires you to prove you have the ability to pay back something long-term. The FHA has had that as a long-standing requirement. FHA only allows families living in that home to be eligible for FHA-insured mortgages. And here are the qualifications for the new loan:

- Their mortgage must have originated on or before January 1, 2008;

– Their mortgage debt-to-income must be at least 31 percent;

– They cannot afford their current loan;

– They did not intentionally miss mortgage payments; and

– They do not own second homes.

Features of FHA-insured loans under the new program include:

- 30-year, fixed rate mortgage;

– Maximum 90 percent loan-to-value ratio;

– No prepayment penalties;

– $550,440 maximum mortgage amount;

– Extinguishment of any subordinate liens; and

– New home appraisals from FHA-approved appraisers.

HUD, Treasury, FDIC and the Federal Reserve will form the Congressionally-mandated Board of Directors and work together to establish additional program standards.

But Your Mortgage Company Can Choose Not to Foreclose

FHA will is asking banks and mortgage companies to come up with an alternative to foreclosing on borrowers. Just like the FHASecure’s recent growth, banks are asked to write-down the outstanding mortgage principal balances to 90 percent of the new value of the property. In many cases, reductions in principle will cost lenders less than the losses associated with foreclosure.

What Happens With This Crazy Financial Market?

This should put the brakes on the foreclosure train, this program will support FHA’s existing effort to stabilize local housing markets. From September 2007 to June 2008, FHA has guaranteed more than $93 billion of mortgage capital.

Where Does the Money Come From?

Well, the FHA will guarantee up to $300 billion in new loans. Families will pay an upfront fee of 3 percent of the original mortgage amount and then an annual premium of 1.5 percent of the outstanding mortgage amount. If there are additional costs, those will be reimbursed by Fannie Mae and Freddie Mac.

Program Timeline

The program will last from October 1, 2008 through September 30, 2011. Since September 2007, FHASecure has helped more than 290,000 families obtain safer, more affordable mortgages. FHASecure is on pace to help 500,000 families by the end of the year.

www.hqblog.com