Created by Congress to assist homeowners at risk of loan default and foreclosure, Hope for Homeowners will allow some homeowners to refinance into more affordable FHA loans. This program was announced on Wednesday.
The program which is voluntary for lenders could help an estimated 4000,000 homeowners and runs through September 30, 2011.
Home mortgage lenders will determine the eligibility of homeowners and consider changes to lower the monthly mortgage loan cost. They will also consider whether to take a loss on the difference between an existing loan and a new mortgage loan set at 90% of the home’s current appraised value.
To qualify existing home mortgages must have been originated January 1, 2008 and present mortgage payments, as of March 1, 2008, must exceed 31% of the borrower’s gross monthly income, along with other requirements.
In August about 110,000 homeowners received loan repayment plans through Hope Now. 79,000 received loan modifications and about 53 percent of homeowners with subprime mortgage loans received workouts and got loan modifications.
Repayment plans, which allow borrowers to catch up on missed payments and become current also require that the home mortgage loan be paid in full within the original maturity date. Changes can involve a reduction in interest rate, part of the loan’s principal being forgiven or an extension of the maturity date.
Hope Now includes mortgage services, financial counselors and other mortgage market personnel. In the past 14 months, the program and other broader efforts by the mortgage loan industry have reportedly helped 2.3 million homeowners.
