FHA Help For Homeowners

The FHA Hope for Homeowners loan program was released in 2008.
The stated goal of the plan is to help homeowners, who are paying
mortgages that are significantly more expensive than when they bought
the home (due to rate adjustments), get a home loan they can afford.

Key components of the FHA Hope For Homeowners loan program are not limited to but include:

• An appraisal will be performed and the maximum loan amount will
  be 90% of that appraised value.  All subordinate liens will be
  extinguished and the exiting lienholder will have to agree to a loss of
  principal.
• The current housing payment must be more than 31% of the homeowner’s gross monthly income.
• The homeowner must not have misrepresented his/her income on the original loan application.
• The homeowner must get a new 30-year fixed rate loan and qualify based upon documented income.
• The homeowner must agree to an declining equity sharing
  agreement (for the existing equity), with the FHA, for a specified
  period of time.
• The homeowner will share in future appreciation with the FHA.
• The program is completely voluntary; existing lienholders don’t have to participate.

Mary Miller compiled some comments from Mortgages Unzipped authors which demonstrates the difficulty of the program.
Loan originators may be hesitant to work with you because of the low
probability of a successful funding.  That low probability is due to
the fact that existing lienholders may have to take significant
writedowns.  I wouldn’t blame an originator who refuses to participate
in the FHA Hope For Homeowners Program; loan originators aren’t paid on
unsuccessful fundings.

Nonetheless, we welcome loan applications, under the FHA Hope for
Homeowners, for Californians in “upside-down mortgages”.  We recently
hired a team member with the skill set to work with lenders’ loss
mitigation departments.  That specific expertise, combined with our long history as a HUD lender,
leads us to believe that we can assist folks who desperately want to
retain their California home.  We offer this program with a few
conditions:

• We must determine your maximum qualified loan through full
  income documentation at application.  If you can qualify for a loan
  amount that might be a reasonable offer to the existing lienholder,
  we’ll proceed to an appraisal.
• You must pay for the appraisal and credit report upfront; that
  should be about $500.  The appraised valuation is a key component of
  the program so that valuation must be established prior to the offer to
  the existing lienholder.
• We expect to earn a 2% fee, whether paid by you or the new lender ( through yield spread premium).
  That’s twice the amount we earn for new loan originations.  We think
  this higher fee is reasonable considering the amount of work required
  and the low probability of loan funding.  We only receive this fee if
  we are successful in funding your new loan.

The FHA Hope for Homeowners Loan program offers Californians a
chance to stay in their homes at a reasonable price.  If your intention
is to live in your home for 5-10 years, this may be a workable solution
for you.

While the plan isn’t perfect we know that certain sub-prime lenders
have sold their loans at a significant discount and will welcome any
and all offers that allow them to make a profit.  For example, if you
have a loan with First Franklin, this program might make sense for
you.  First Franklin was purchased by Merrill Lynch, in early 2007.  Merrill Lynch sold these loans,
for 33 cents on the dollar, this past summer.  What that means is that
they sold your $500,000 loan to an investor for $165,000.  If we have
to approach First Franklin’s loss mitigation department with a $350,000
payoff for that $500,000 loan, the new investor stands to more than
double his money in a few months.  That’s a reasonable proposition to
entertain.

Not all loan servicers will be that cooperative, though.  We believe
that our connections with Wall Street and secondary mortgage market
investors will be a distinct advantage to you, the beleaguered
California homeowner.  The FHA Hope for Homeowners Loan program isn’t
perfect but it may offer you significant relief.  Please contact me if you have questions about it.

Originally posted on Mortgages Unzipped

If you are interested in purchasing any of the properties you find featured on our Foreclosure Listings page we have highly qualified agents ready to assist you. 

If you need to discuss the possibility of a short sale on a home you now own, we have experienced short sale agents on our staff. 

Bob Taylor Properties, Inc.
5526 North Figueroa Street,
Los Angeles, CA 90042
323.257.1080
bobtaylorproperty@gmail.com
DRE# 01304057