UPDATE 11/18/2008 - In my Personal Opinion this program is more talk than benefit to consumers. A number of other programs have been announced that seem more likely to succeed. Your first step should be is to contact your current lender(s) to see what programs they are participating under.
I welcome anyone reading this blog entry to post any information that they have found with respect to any particular lender programs that you find available.
FHA/HUD has released information on the Hope for Homeowners (MORTGAGEE LETTER 2008 - 29)
Below you will find the Eligibility Requirements for the Borrower to qualify for the program.
If borrowers are eligible they will need their current lender to agree to accept the proceeds of the H4H as full payment on their loan. There is also a provision for Sharing the Equity and Equity Appreciation.
Because of the details of the program it is best that any homeowners speak with a lender that participates in the program.
Borrower Eligibility
Borrowers who are current or delinquent on their mortgage at the time of the refinance are eligible for this Program, if they:
Have not intentionally defaulted on their mortgage or any other debt (Intentionally defaulted means the borrower had available funds that could pay the mortgage and other debts without hardship. Debts subject to a documented bona fide dispute may be excluded.) AND
Have made a minimum of six (6) full payments during the life of the existing senior mortgage (full payment is defined as what was acceptable to the lender for meeting the monthly payment obligation under the terms and conditions of the mortgage).
Borrowers must reside in the property securing the loan being refinanced, and may not have an ownership interest in other residential real estate, including second homes and/or rental properties.
Borrowers cannot have been convicted of fraud under state and Federal laws in the last 10 years.
Similar to its validation tool for social security numbers, FHA will use an automated tool at the time of case number assignment that will check the borrower's name against several databases for convictions of fraud and an ownership interest in other residential properties. In the event that the lender receives a warning at case number assignment and believes it is in error, it must provide evidence to the appropriate Homeownership Center documenting that the borrower has not been convicted of fraud or does not have an ownership interest in other residential properties. Once the Homeownership Center evaluates the documentation, it will determine whether to lift the warning.
Borrowers must certify that they did not knowingly or willfully provide material false information to obtain the existing mortgages being refinanced under the H4H Program.
As of March 1, 2008, the borrower's aggregate total monthly mortgage payment debt-to-income ratio (DTI) on all existing mortgages must be greater than 31 percent of the borrower's gross monthly income. The total monthly mortgage payment is defined as the fully-indexed and fully-amortized Principal, Interest, Taxes and Insurance (PITI) payment (this includes principal and interest, taxes and insurances, homeowners' association fees, ground rents, special assessments and all subordinate liens).
FHA recognizes that reconstructing the borrower's prior total monthly mortgage payment DTI as of March 1, 2008 may be difficult, especially as the H4H Program nears its sunset date. To comply with this eligibility requirement, lenders must obtain:
From the borrower, evidence that the prior mortgage DTI was more than 31 percent on March 1, 2008, such as pay stubs for March 2008, or a signed and dated copy of the individual 2008 Federal tax return, when available, to determine gross monthly income for that month (earnings divided by 12), or W-2s, financial records, or verification of employment from the borrower's employer.
Lenders may also rely on the borrower's signed and dated 2007 Federal tax return if the lender has no reason to believe that the borrower's income in March 2008 was materially different than the income reported on the 2007 Federal tax return.
To determine March 2008 income for self-employed borrowers, obtain a copy of the quarterly tax return that contains income stream information for March 2008 or a signed and dated Profit and Loss Statement and balance sheet that contains income stream information for March 2008 or a signed and dated copy of the individual 2008 Federal tax return, when available, (earnings divided by 12).
From the servicer of the mortgage, the borrower's total monthly mortgage payment due for March 2008, including any amounts due on subordinate liens.
For mortgages without escrow accounts, the lender should obtain tax and insurance information from the borrower. If the borrower does not provide insurance information, then the servicer of the mortgage should estimate the monthly cost of hazard insurance (and flood insurance, if applicable) based on the property's location and the rates in effect for 2008. If the borrower does not provide real estate tax information, the lender should obtain it from public records.
In Ohio please consider visiting
www.AllOhioMortgage.com
So far finding lenders willing to participate in this program has not occured here in Ohio.
Below is an opinion article from the New York Times that I found that might be the reasons. http://www.nytimes.com/2008/10/02/opinion/02thu1.html?_r=1&ref=opinion&oref=slogin
Falling house prices are driving the collapse of the financial system. But the bailout bill, even the "sweetened" version that was approved by the Senate Wednesday night, does little to avert the defaults and foreclosures that are pushing house values ever downward.
At last count, six million people were expected to default on their mortgages this year and next, putting them at risk of losing their homes unless they can catch up in their payments or catch a break on their loan terms. And they're not the only ones at risk. As prices drop, millions of people who have never missed a mortgage payment stand to lose their home equity.
Leaving these Americans out of the bailout bill is unwise and unfair, but neither Congress nor the Bush administration has ever shown anywhere near the sense of urgency to rescue homeowners at the bottom of the collapse as they have for the financiers at the top of it.
Take, for example, a new government program that took effect on Wednesday with the aim of helping as many as 400,000 struggling homeowners keep their homes. Even before it got started, the program - called Hope for Homeowners - was looking like a lead balloon.
Under the program, the government will insure up to $300 billion in new, more affordable loans for troubled borrowers. For the insurance to kick in, however, lenders must first voluntarily refinance the delinquent mortgages by reducing the loan balances to 90 percent of the home's current market value.
In exchange, lenders would avoid the expense of foreclosure and uncertainty about being repaid. The government would stem the social and economic damage of more foreclosures, at presumably little risk to taxpayers.
There's just one problem. At a Congressional hearing in September, lenders were lukewarm about participating in the new program - reluctant, it seems, to take the loss that comes with reducing loan balances.
The lenders, including JPMorgan Chase, Bank of America, Wells Fargo and CitiMortgage, a unit of Citigroup, all said they were taking other steps to help troubled borrowers, like reducing a loan's interest rate or extending its term. That's helpful, but the industry's efforts don't go far enough: defaults and foreclosures continue to outstrip efforts to rework bad loans.
As home prices fall, the most effective modification is to reduce the loan balance; otherwise, borrowers are in the position of repaying a loan higher than the value of the property. That burden can become unbearable when combined with unemployment or reduced work hours or unexpected expenses like medical bills.
There are two sides to the mortgage mess. The mortgage industry, in pursuit of upfront fees, deliberately made loans to people who could not afford the payments over time. They justified their actions on the self-serving and unsound basis that rising home values would forever postpone a day of reckoning.
Many borrowers - naïvely, foolishly or selfishly - took on those loans. Yet well over a year into the housing bust, the mortgage industry still calls the shots, as if it is a victim of the borrowers.
Congress could change that dynamic, by amending the bankruptcy code to allow the court to modify troubled mortgages. But lawmakers still are afraid to hold the industry accountable. Instead, they are offering Hope for Homeowners that looks to be anything but.
I spoke with a friend of mine who was at a roundtable meeting that the HUD secretary was at recently. Straight from the mouth of the Secretary; "This program will not work as designed, we are going to have to change it." Additionally, only servicers are going to be able to originate these loans. For all the hype, there isn't much reality!
Rich,
Thanks for your comment and update.
Tim
HUD Secretary words are right!! They new that from the start that this program wouldn't fly. Maybe this program was just to throw off the American people & the housing market while trying to focus on how to fix other unnecessary things like bailing out large financial corporations, Who don't want to help the people who desperately needs help with their mortgage. I myself, my situation is upside down. My current lender is one of the biggest fraud...yes " CITI RESIDENTIAL ". They are no help. They claim they are trying to find other alternatives like reducing rates or extending the terms. This does not make any sense, It is only going to put them back into the same situation years to come (greedy bastards). The program works, It's just congress/government needs to step in and give it straight out to these lenders and not give them an option if they want to participate...after all didn't the government bail out these large financial corps... It is so sad...it goes back to saying " America the Beautiful ".
Anom, I am not sure how to respond to your post. I would not like to be in HUD's shoes today. Congress passed HR 3221 which charged HUD to come up with a program to offer something to consumers. One of the problems is the bill offered no real incentive to the lenders to participate in the program. Your mention of CITI is misplaced because CITI is the servicer of your loan. The lender is the owner of the Mortgage Backed Securities and CITI is only the one responsible for the collection of your monthly payments and the accounting functions.
I would suggest that you keep your eyes and ears open for other options that might assist you. I do suspect that more options will be presented in the future. I have heard isolated cases where some lenders have offered some borrowers loan modifications that either extended the term of the loan or reduced the rate on the mortgage. From what I have heard these are being done on a case by case basis. As I say, Keep your eyes and ears open to see if something becomes available that might assist you.
Finally, it might have helped others if you had provided some information about your particulars.