HOPE FOR HOMEOWNERS PROGRAM

Hope for Homeowners maintains FHA's long-standing requirement that new loans be based on a family's long-term ability to repay the mortgage. By continuing to slow the rate of foreclosures, 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. FHA allows only owner-occupants to be eligible for FHA-insured mortgages. Borrowers must also meet the following eligibility criteria:

- 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.
- 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.
- $550,400 maximum mortgage amount, and will include charges for FHA insurance premiums.
- Extinguishment of any subordinate liens.
- New home appraisals from FHA-approved appraisers.
- Upon obtaining the FHA refinance, the borrower must share with the FHA at least 50 percent of any equity realized through a subsequent sale or refinance.

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

FHA will insure up to $300 billion in new loans. Borrowers will pay an up-front premium of 3 percent of the original mortgage amount and an annual premium of 1.5 percent of the outstanding mortgage amount. Any additional costs incurred by FHA will be reimbursed by Fannie Mae and Freddie Mac.


Voluntary Lender Participation


FHA will continue to offer lenders an alternative to foreclosing on borrowers. Similar to FHASecure's recent expansion, lenders will be encouraged to write down the outstanding mortgage principal balances to 90 percent of the new value of the property. In many cases, reductions in principal will cost lenders less than the losses associated with foreclosure; however, lender participation is voluntary.


Program Timeline


The program will last October 1, 2008, through September 30, 2001. 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.