US Consumer Loan Aid–Has Its Limits:


November 27, 2008

U.S. Consumer Loan Aid Will Trickle Only So Far

 

 If you’re buying a home, refinancing a mortgage or seeking an auto or student loan, the new government plans to make borrowing cheaper and easier sound like a gift.

One problem, however, is that whole categories of people may be ineligible. If you are refinancing, you could be out of luck if your mortgage balance is more than your house is worth. And for all kinds of new loans, lenders have raised their standards even as their customers’ credit records are deteriorating because of late payments and other problems.

And then there is the fact that the government’s efforts may take a while to start working — if they do at all. Once again, the government hopes that the benefits to consumers will trickle down. It is not simply lending to them directly.

So while mortgage rates fell by at least a quarter of a percentage point on Tuesday, the day of the government announcement, and stayed there Wednesday, it could take months for the piece that affects credit card and small-business loans to kick in.

“It’s not going to be like flipping a light switch,” said Joe Belew, president of the Consumer Bankers Association. “You’re not going to see an avalanche of new loans. But the system is under a lot of stress, and anything that can lubricate the markets is a good thing.”

The federal government made two big moves on Tuesday. The first, already known as TALF, for Term Asset-Backed Securities Loan Facility, is a $200 billion program that will lend money to private investors who buy securities backed by student and auto loans, credit card debt and small-business loans guaranteed by the Small Business Administration.

The goal of the plan is to fix the mechanism that keeps credit flowing freely from lenders to borrowers. Lenders often package consumer loans into securities and sell them to investors. Then the lenders use the proceeds to issue more loans to consumers. But over the last two months, those investors have stopped buying.

To encourage those investors to start buying again, the Federal Reserve has agreed to lend them money at attractive interest rates to buy the securities backed by consumer debt. It is also providing an insurance policy should many of the loans underlying those securities default.

In the second part of the program, the Fed has agreed to purchase $500 billion of mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae.

“This brings a major buyer into the marketplace with very deep pockets to snap up available securities, and a sizable number of them at that,” said Keith T. Gumbinger, vice president of the financial publisher HSH Associates in Pompton Plains, N.J. “With new demand for both debt- and mortgage-backed securities coming into the market, the dollar value of those investments can rise, helping to lower their yields. Mortgage rates track those yields, and decline right along with them.”

Lower mortgage rates will certainly help some consumers qualify for mortgages who may not have otherwise; lower rates translate into lower payments. The move downward will also move some borrowers to try to refinance their mortgages. But that does not necessarily mean banks will be any more likely to oblige. Another complication is that the value of many homes — even those owned by people with stellar credit — have declined, making refinancing difficult.

“At the end of the day, it still comes down not to just a rate discussion, but a discussion about qualifications as well,” said Cameron Findlay, chief economist at LendingTree. “There are fundamental elements of qualifications for loans that will inhibit the ability of this program to have any meaningful, significant impact.”

Lower mortgage rates do little when unemployment rises and wages stagnate, he added.

To qualify for the best rates, borrowers will need to have a credit score of at least 720 and a down payment of at least 10 percent and probably closer to 20 percent. Borrowers seeking to refinance will need to have the same amounts in home equity.

Still, lower rates may lure some potential homebuyers back to the market. Some brokers have already started fielding calls. “The phones are ringing,” said Joseph Taglivia, chief operating officer of Manhattan Mortgage. “There were certainly people who called to lock in a refinancing or to find out what they qualified for to purchase.”

The efforts to loosen the purse strings in other areas of consumer lending may take longer, however, if they work at all. Most of the big credit card companies are parts of banks with billions on deposit. They can already use those deposits as a ready source for new credit card loans.

“Banks may want to fund fewer of these loans out of their deposits,” said Odysseas Papadimitriou, who worked in the card industry at Capital One before starting Evolution Finance, parent company of Cardhub.com, a consumer card selection site. It is possible, he said, that they will simply swap one source of financing for another and not increase the total amount of loans that they are willing to make.

American Express is unique in that it does not have a big deposit-gathering apparatus. Joanna Lambert, a company spokeswoman, said that the company was still working through the details of the TALF program but would take advantage of it if it was eligible.

It is not yet clear how much the government program will help grease the wheels for small-business bank loans, but there is already a potential bright spot that business borrowers may not have considered. “Credit unions have been seeing so many opportunities in the marketplace,” said Christine Barry, research director at Aite Group, a financial services research and consulting firm. About 40 percent of credit unions are either lending to small businesses now or expect to start doing so soon, she said.

With auto and student loans, there may be more reason for optimism, given that many lenders in these areas are specialists who may not have access to consumer deposits to use to finance loans. The renewed opportunity to sell more loans to investors could help those consumers.

But none of the government’s moves alters some unfortunate facts. Lenders want better credit scores from consumers in every category. At the same time, millions of people are much less creditworthy than they used to be, because of the damage they have done to their credit scores through late or missed payments.

Lenders themselves have contributed to the downturn in creditworthiness by lowering the credit limits on huge numbers of customers’ credit cards. This has the effect of raising the percentage of available credit that a consumer is using, which usually causes their credit scores to fall.

Clearly, the banks do not have the confidence in how consumers will handle credit that they might have had six months ago. It is not clear whether a new source of funds will cure this skittishness.

Nor is it certain how much untapped desire to borrow exists. The fact that consumer spending fell an entire percentage point last month, as the Commerce Department reported Wednesday, may reflect something other than a lack of capital.

“If consumers are afraid to make purchases, it doesn’t really matter how much available credit you have,” said Mr. Papadimitriou of Evolution Finance.

Foreclosure Recovery Scams–Be Warned:


If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home!  Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a housing counselor

FORECLOSURE ALERT – Homeowners: Be Informed About Foreclosure Consulting Services

Las Vegas — The Nevada Division of Mortgage Lending and the Consumer Affairs Division are warning homeowners to be cautious when contracting with companies representing themselves as “foreclosure consultants”. While many of these providers are legitimate, many are not and may charge hundreds of dollars up front to negotiate with a lender on behalf of the homeowner, often without success.

“There are laws prohibiting fees being charged up front for foreclosure assistance,” says Mortgage Lending Commissioner Joe Waltuch. According to NRS 645F.400, foreclosure consultants cannot charge a fee before they have performed the services you’ve contracted for. 

“It’s important to remember, however, that those laws only take affect when the home has officially been placed in the lender’s foreclosure cycle,” continued Commissioner Waltuch. “Depending on the services offered, the foreclosure consultant may also need to be registered with the Nevada Consumer Affairs Division under the Credit Service Organization law.”

According to NRS 598.741, companies providing “counseling or assistance to a person in establishing State of Nevada or effecting a plan for the payment of his indebtedness” must be registered with Consumer Affairs. “Before signing any contracts, check with Consumer Affairs to determine if the company is registered,” says Consumer Affairs Commissioner James Campos. “It also helps to check with the Better Business Bureau for complaints and to research the company on the Internet to see what experiences other consumers have had.”

Adds Commissioner Waltuch, “Be careful when using the Internet to find these types of companies.  There are many out-of-state companies, and some lawyers, who claim they can help you. Make sure they are legitimate businesses, properly licensed to operate in Nevada.”

Consumers may also receive foreclosure assistance, including loan modification help, by working with a qualified housing counselor. Legitimate foreclosure consulting agencies are generally nonprofits that never charge an up-front fee and are usually free. Visit http://foreclosurehelp.nv.gov/HousingCounselors.html for a list of qualified Nevada housing counselors.

If you think you have been victimized by an unscrupulous foreclosure consultant, file a complaint with Consumer Affairs at http://www.fyiconsumer.org/Forms/ComplaintFormLV.pdf. For more information about foreclosure scams, visit the Foreclosure Help Website at http://foreclosurehelp.nv.gov/ForeclosureScams.html.

In addition, Commissioner Campos encourages consumers to visit the Fight Fraud Website at http://fightfraud.nv.gov/. “The site includes extensive tips on how to prevent fraud and provides downloadable complaint forms to help you respond effectively if you become a victim,” says Campos. “Visit it regularly for the latest fraud alerts.”

FORECLOSURE ALERT

If your property mortgage is delinquent and you are facing foreclosure, you may be contacted by a person or company willing to take the property off your hands to save your credit. While some of these companies are actually good and do help, others are not.

  • Do not sign anything that you do not understand or that is blank. Go through a reputable escrow company to make sure that your mortgage(s) is paid off to the satisfaction of the lender(s). If you do not do this, you may find that the person or company has title to or owns your property, yet the mortgage is still in your name. The person or company pays nothing to the mortgage(s) holder. The foreclosure happens. Your credit is ruined while the company “saving” your credit has made money from your property by renting it until the foreclosure.

If you think you’ve been a victim of this fraud, contact Nevada Consumer Affairs Division at (702) 486-7355 or (775) 688-1800.

 Common Foreclosure Scams

  1. Equity skimming: A “buyer” approaches you, offering to get you out of financial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The “buyer” may suggest that you move out quickly and deed the property to him or her. The “buyer” then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose. Remember, signing over your deed to someone else does not necessarily relieve you of your obligation on your loan.

  2. Phantom help: The “rescuer” charges outrageous fees for light-duty phone calls or paperwork that the homeowner could easily do, none of which results in saving the home. This predatory scam gives homeowners a false sense of hope and prevents them from seeking qualified help.

  3. The bailout: In this scam, the homeowner is deceived into signing over title with the belief that he will be able to remain in the house as a renter and eventually buy it back over time. The terms of these scams are so onerous that the buy-back becomes impossible, the homeowner loses possession and the “rescuer” walks off with most or all of the equity.

  4. The bait-and-switch: In this scam, the homeowners think they are signing documents to bring the mortgage current, but instead actually surrender their ownership. They usually don’t even know they’ve been scammed until they’re evicted.

  5. Phony counseling agencies. Some groups calling themselves “counseling agencies” may approach you and offer to perform certain services for a fee. These could well be services you could do for yourself for free, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale.

7 Ways to Avoid Foreclosure Scams

Follow these tips from the National Consumer Law Center.

  1. Don’t panic. Get detailed information about the deadlines you face in resolving your problems. Pay special attention to the date on which you would lose legal right to ownership.
  2. Never sign a contract under pressure. Take your time, and consult a lawyer if possible.
  3. Never sign away ownership via a quitclaim deed or other means without consulting a lawyer. Be especially suspicious of offers to lease back your home, in order to buy it back over time. These offers are weighted against you.
  4. Never make your mortgage payments to anyone other than your lender. If you can’t pay, do not ignore warning letters from your lender; contact them instead.
  5. Beware of any home-sale contract in which you are not formally released from liability for your mortgage. Make sure you know the rights you are giving up and that you agree to give them up.
  6. Don’t sign anything with blank lines or spaces; information could be added later without your knowledge and consent.
  7. If you do not speak English, never use a “rescuer’s” translator. Instead, insist on using your own translator.

 Source:  http://www.hud.gov/foreclosure/index.cfm, http://www.bankrate.com/brm/news/mortgages/20050728a1.asp, and the NationalConsumerLawCenter

 

Speedier Service at Countrywide


Countrywide has started moving things faster than the previous procedure. Phones are picked up sooner than expected. I talked to one of the supervisor and she told me that they have hired more people. In fact, when I called this morning, the whole room was buzzing with sounds and seems an efficient way to run this onslaught of loan modification business. The supervisor was pleasant and eager to help. As long as your documents are in order, and you supply them ahead of time, a loan modification specialist would contact you and discuss negotiation of your loan modification. Folks, as I stated before Countrywide is under a legal agreement with the Nevada State Attorney General to do loan modification up to the tune of 600 millions dollars for the state of Nevada. Please contact me for more information.

Next Two Months are Important in Loan Modification


It seems like the loan modification program by various banks is moving forward albeit on a slow pace. My impression is that once all the policy is laid down, and the loan modification personnel’s doubts are cleared, the pace of loan modification would pick up. However, for people who like to do loan modification it is suggested that they should have their papers in order and ready. We like to sum up all those documents one more time:

- Bank statements for the last three months

- Payroll stubs for the last 3 months

-Tax Return for the year 2007

- Employment record of both spouses

- Hardship letter, and reasons why this loan modification is required

-copies of their mortgage payments coupon

FDIC Lays Down Home Loan Modification Plan


FDIC lays out broad home loan modification plan

Fri Nov 14, 2008 2:47pm EST
 Related NewsBy Karey Wutkowski

WASHINGTON (Reuters) – The federal agency that insures most U.S. bank deposits unveiled a plan to prevent about 1.5 million home mortgage foreclosures by promising to share any losses with mortgage companies that agree to refinance certain home loans.

The agency, the Federal Deposit Insurance Corp, said on Friday the plan would cost the government about $24.4 billion, which could be paid from the U.S. Treasury’s $700 billion bailout program for the financial industry.

So far, most of the money in the bailout program, the Troubled Asset Relief Program, or TARP, has been injected as capital into banks.

FDIC Chairman Sheila Bair, who spent weeks unsuccessfully lobbying Bush administration officials for the foreclosure prevention plan, unveiled her agency’s proposal two days after Treasury Secretary Henry Paulson dismissed the idea of the government underwriting failing home loans.

Paulson told reporters on Wednesday, “That (foreclosure plan) is a subsidy, or spending, program. The TARP was investment, not spending.”

The FDIC pushed forward with its plan, posting it on its website Friday morning (http://www.fdic.gov/consumers/loans/loanmod/index.html).

“Although foreclosures are costly to lenders, borrowers and communities, the pace of loan modifications continues to be extremely slow,” the FDIC said. “It is imperative to provide incentives to achieve a sufficient scale in loan modifications to stem the reductions in housing prices and rising foreclosures.”

The FDIC said its plan would modify about 2.2 million mortgage loans by offering financial incentives to mortgage servicers. It would pay servicers $1,000 to cover expenses for each loan modified to the required standards, and would promise to share up to 50 percent of losses incurred if a modified loan defaults.

Eligible borrowers would include those who have missed at least two monthly payments on loans for homes they live in. Servicers would be expected to lower those borrowers’ monthly payments to about 31 percent of the borrowers’ monthly income.

The Treasury Department said on Friday that it was aggressively looking at ways to reduce skyrocketing home foreclosures under the TARP.

“We continue to aggressively examine strategies to mitigate foreclosures and maximize loan modifications, which are a key part of working through the necessary housing correction and maintaining the strength of our communities,” Treasury Interim Assistant Secretary Neel Kashkari said in testimony prepared for delivery to a U.S. House of Representatives committee.

(Reporting by Karey Wutkowski; editing by John Wallace) 

Summary of the Housing and Economic Recovery Act


Summary of the “Housing and Economic Recovery Act of 2008″

 A. Summary of the “Federal Housing Finance Regulatory Reform Act of 2008

 This legislation strengthens and modernizes the regulation of the housing government-sponsored enterprises – Fannie Mae and Freddie Mac (the enterprises) and the Federal Home Loan Banks (FHLBs or Banks) – and expands the housing mission of these GSEs. In addition, it creates a new program at FHA that will help at least 400,000 families save their homes from foreclosure by providing for new FHA loans after lenders take deep discounts.The program is built on five principles:

  •  Safety and Soundness Regulation of the Housing GSEs The “Federal Housing Finance Regulatory Reform Act of 2008″ establishes a new, independent, “world class” regulator for Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, the housing government-sponsored enterprises (GSEs). The legislation endows this regulator with broad new authority, equivalent to the authority of other federal financial regulators, to ensure the safe and sound operations of the GSEs, including the power to: Establish capital standards;establish prudential management standards, including internal controls, audits, risk management, and management of the portfolio;
  • enforce its orders through cease and desist authority, civil money penalties, and the authority to remove officers and directors;
  • • restrict asset growth and capital distributions for undercapitalized institutions;• put a regulated entity into receivership; and• review and approve (subject to notice and comment) new product offerings.
  • II. Mission Improvement The new legislation also significantly enhances the affordable housing component of the GSEs’ mission, and expands the number of families Fannie Mae and Freddie Mac (the enterprises) can serve by raising the loan limits in high cost areas (areas with median house prices that are higher than the regular conforming limit) to 150% of the conforming loan limit. Currently, this would be $625,000.

     B. Summary of the “HOPE for Homeowners Act of 2008″

     The “HOPE for Homeowners Act of 2008″ creates a new, temporary, voluntary program within FHA to back FHA-insured mortgages to distressed borrowers. The new mortgages offered by FHA-approved lenders will refinance distressed loans at a significant discount for owner-occupants at risk of losing their homes to foreclosure. In exchange, homeowners will share future appreciation with FHA.

    Finally, the legislation creates a new Housing Trust Fund and a Capital Magnet Fund, financed by annual contributions from the enterprises, which will used for the construction of affordable rental housing.

     For the Federal Home Loan Banks (FHLBs), the legislation requires new affordable housing goals similar to those that apply to the enterprises for FHLB mortgage purchase programs. The legislation also requires the FHLBs to create a public use data base for such programs. Treasury-certified Community Development Financial Institutions (CDFIs) would become eligible to join FHLBs. Finally, community financial institution members of the FHLBs may use FHLB advances for community development purposes.

     1. Long-term affordability. The program is built on the idea, expressed by Federal Reserve Chairman Bernanke, that creating new equity for troubled homeowners is likely to be a more effective way to avoid foreclosures. New loans will be based on a family’s ability to repay the loan, ensuring affordability and sustainable homeownership.

    2. No investor or lender bailout. Investors and/or lenders will have to take significant losses in order to benefit from the proceeds of the loans refinanced with government insurance. However, these losses would be less than the losses associated with foreclosure.

    3. No windfall for borrowers. Borrowers will share their new equity and future appreciation equally with FHA. Borrowers will pay for the FHA insurance.

    4. Voluntary participation. This will be a voluntary program. No lenders, servicers, or investors will be compelled to participate.

    5. Restore confidence, liquidity, and transparency. Credit markets are fearful and frozen in part because banks and other financial institutions do not know what their subprime mortgages and related securities are worth. The uncertainty is forcing lenders to hoard capital and stop the lending necessary for economic growth. This program will help restore confidence and get markets flowing again.

      An Oversight 

      . The new program will be overseen by a Board made up of the Secretary of HUD, the Secretary of the Treasury, the Chairman of the Federal Reserve Board, and the Chairman of the Federal Deposit Insurance Corporation (FDIC). The Board will have the authority to develop standards within the framework of the legislation. Eligible Borrowers

     . Only owner-occupants who are unable to afford their mortgage payments are eligible for the program. No investors or investor properties will qualify. Homeowners must certify, under penalty of law, that they have not intentionally defaulted on their loan to qualify for the program and must have a mortgage debt to income ratio greater than 31 percent as of March 1, 2008. Lenders must document and verify borrowers’ income with the IRS.

     New Loan Amount

     Equity & Appreciation Sharing For the enterprises, the legislation tightens targeting requirements of the affordable housing goals, and rewrites those goals to ensure that the enterprises provide liquidity to both ownership and rental housing markets for low and very-low income families. The legislation requires the enterprises to serve a variety of underserved markets, such as rural areas, manufactured housing, and the preservation market. The legislation improves reporting requirements for affordable housing activities, including the expansion of the public use data base, and strengthens the new regulator’s ability to enforce compliance with the housing goals.

    . In order to avoid a windfall to the borrower created by the new 90% loan-to-value FHA-insured mortgage, the borrower must share the newly-created equity and future appreciation equally with FHA. This obligation will continue until the borrower sells the home or refinances the FHA-insured mortgage. Moreover, the homeowner’s access to the newly created equity will be phased-in over 5 years.

    Eligible Mortgages

    . In order to protect against adverse selection, the program prohibits the Secretary from paying an insurance claim whenever the representations and warranties required to be made by lenders are violated, or in cases in which a borrower has an early payment default and misses the first payment. The Act provides the Board the authority to establish other protections against adverse selection, such as requiring “seasoning” for certain higher risk loans before they can be insured under the program. Appraisers of property insured by FHA must be certified by the state where the property is located, or by a nationally recognized professional appraisal organization, and have “demonstrated verifiable education” in FHA appraisal requirements.

    Existing Subordinate Liens

    . Before participating in this program, all subordinate liens must be extinguished. This will have to be done through negotiation with the first lien holder.

    Qualified Safe Harbor

    The legislation provides servicers with an incentive to participate in the program by offering a safe harbor against legal liability.

    Program Size

    The program is authorized to insure up to $300 billion in mortgages and is expected to serve approximately 400,000 homeowners.

    Program Sunset

    The program will begin October 1, 2008 and sunset on September 30, 2011. CBO say the program will net nearly $250 million for taxpayers. The program is paid for by using part of the Affordable Housing Trust Fund; the GSE bill provides a further $2 billion cushion for the government by establishing a reserve fund at Treasury over ten years. If the program costs less than projected, the unused funds are returned to the Affordable Housing Trust Fund. If the program more than pays for itself (as was the case during the Roosevelt Administration), any excess savings are dedicated to reducing the national debt.

    C. Summary of the “Foreclosure Prevention Act of 2008″

    The Foreclosure bill passed by the Senate on April 10 contains the following provisions designed to address the problems faced by families and their communities in light of the foreclosure crisis:. To ensure that additional families can access the FHA program, which provides safe, fixed-rate mortgages, significant FHA reform is included to modernize, streamline and expand the reach of the FHA program. Under this bill, the FHA loan limit is

    1. FHA Modernization

     increased from 95% to 110% of area median home price with a cap at 150% of GSE limit (currently, $625,000), allowing families in all areas of the country to access homeownership through FHA. Downpayments of 3.5% will be required for any FHA loan and counseling requirements are enhanced to help provide for stable homeownership.

    Homes that have been foreclosed upon and are sitting unoccupied lead to declines in neighboring house values, increased crime and significant disinvestment. To ensure that communities can mitigate these harmful effects of foreclosures, $3.92 billion is provided to communities hardest hit by foreclosures and delinquencies. These supplemental Community Development Block Grant Funds will be used to purchase foreclosed homes, at a discount, and rehabilitate or redevelop the homes to stabilize neighborhoods and stem the significant losses in house values of neighboring homes.

    To help families avoid foreclosure, this bill provides $150 million in additional funding for housing counseling. These funds will be distributed by the Neighborhood Reinvestment Corporation by the end of 2008 to ensure families can quickly get the help they need. As many as 250,000 additional families connect with their mortgage servicer or lender to explore options that will keep them in their homes as a result of these counseling funds. In addition, $30 million is provided to help provide legal services to distressed borrowers.

    To ensure that consumers are provided with timely and meaningful disclosures in connection with mortgages, the bill expands the types of home loans subject to early disclosures (within three days of application) under the Truth In Lending Act (TILA) including refinancings. The bill requires that disclosures be provided no later than 7 days prior to closing so borrowers can shop for another loan if not satisfied with the terms. The bill requires a new disclosure that informs borrowers of the maximum monthly payments possible under their loan, and also increases the range of statutory damages for TILA violations from the current $200 to $2000 to $400 to $4000.

    To assist returning soldiers avoid foreclosure, this bill lengthens the time a lender must wait before starting foreclosure from three months to nine months after a soldier returns from service and also provides returning soldiers with one year relief from increases in mortgage interest rates. In addition, the Department of Defense is required to establish a counseling program to ensure veterans and active service members can access assistance if facing financial difficulties. Also included is a provision that increases the VA loan guarantee amount, so that veterans have additional homeownership opportunities. The bill contains provisions to do the following: increase benefits paid to veterans with disabilities such as blindness for the purpose of adapting their housing; provide a moving benefit to servicemen and woman who are forced to move out of rental housing because the owner of the housing was foreclosed on; provide that veterans benefits received in a lump sum are treated the same for the purposes of eligibility for housing assistance as monthly benefits; and to allow the Veterans Administration to provide for improvements and structural alterations to homes of veterans with service-connected disabilities.

    Preserving the American Dream for Our Nation’s Veterans.Enhancing Mortgage Disclosure.Providing Pre-Foreclosure Counseling for Families in Need.Assisting Communities Devastated by Foreclosures.

     . The size of the new FHA-insured loan will be lesser of the amount the borrower can afford to repay, as determined by the current affordability requirements of FHA; or, 90% of the current value of the home. Loans must be 30-year, fixed rate loans.

     

Consumers Frequently Asked Questions:


 
 

HOPE for Homeowners Frequently Asked Questions for Consumers

 

General/Program Related Questions

What is the HOPE for Homeowners Program (H4H)?

This new program, created by Congress, is intended to help borrowers at risk of default and foreclosure refinance into more affordable loans.

How can the H4H program help me?

If you are having trouble making your mortgage payments, this program may allow you to refinance your loan into a new 30-year fixed rate loan with lower payments.

Do I have to pay anything to apply?

There will be closing costs associated with HOPE for Homeowners loans; however, they may not be required to be paid out of pocket by the borrower. Please consult your lender or a HUD-approved Housing Counselor for more details.

How long will the process take?

Processing time will vary, but usually takes approximately 60 days. Please consult your lender when you apply.

What information do I need to apply?

Your lender is in the best position to answer this question based on your specific situation, but at a minimum you will need evidence of your income and assets, as well as your current mortgage information.

How long is the H4H program available?

The program began on October 1, 2008 and will end on September 30, 2011.

What interest rate will I receive?

The interest rate for the new H4H loan will be provided by the lender and is based on current market rates.

I don’t want another adjustable rate mortgage. Will this interest rate be fixed or adjustable?

All HOPE for Homeowners loans are 30-year fixed rate mortgages insured by the Federal Housing Administration (FHA).

I contacted my lender and they are not interested in participating in this program. Can I apply with HUD?

HUD does not accept loan applications or lend money directly; however, you may apply with any FHA-approved lender who is participating in the program. You may also consult a HUD-approved housing counselor.

Eligibility Questions

My lender has started foreclosure proceedings. Can I still apply for H4H?

Yes, however, time is of the essence.

Is there an income restriction?

No, but you will need to demonstrate that you have sufficient, steady income to make the new H4H mortgage payments.

I recently filed for bankruptcy. Am I still able to apply for H4H?

Yes, borrowers in bankruptcy may participate; however, you will want to consult with the person handling your bankruptcy.

My lender has already foreclosed on my home. Can I still apply for H4H?

It may be possible depending on which stage of the foreclosure process you are in. You should talk to your lender immediately for more detailed information.

I have a first and second mortgage on my home. Can I still apply for H4H?

Yes, however, all your existing lenders must agree to release the liens against your home.

I am current on my mortgage. Can I apply for H4H?

Yes.

Lender Related Questions

Can you recommend a lender?

HUD does not recommend lenders; however, a list of participating lenders is located on our website at http://www.hud.gov. In the section marked “At your service,” please click on the link “Find a HUD approved Lender in your area.”

I can’t reach my lender and I would like to apply. What should I do?

You may contact any participating lender to apply. For a list of HUD-approved lenders, please go to our website at http://www.hud.gov. In the section marked “At your service,” please click on the link “Find a HUD approved Lender in your area.”

My lender is not registered and I would like to apply. What should I do?

You may contact any participating lender to apply. For a list of HUD approved lenders please go to our website at http://www.hud.gov. In the section marked “At your service,” please click on the link “Find a HUD approved Lender in your area.”

Counseling Questions

I am not clear on what to do. How do I decide if this is the right choice for me?

You can contact a HUD-approved Housing Counselor in your area. They can help you evaluate the different options that may be available to you, and help you determine your best course of action. You can locate a housing counselor in your area on our website.

How can a housing counselor help me?

Housing counselors are knowledgeable about available programs to help struggling homeowners. They can review your specific situation, identify your options and help you make an informed decision.

Will I have to pay taxes on the portion of my loan(s) my current lender(s) “write off” or forgive?

You should contact the Internal Revenue Service at (800) TAX-1040, or your tax advisor regarding tax-related questions.