Congress passed a new foreclosure relief program earlier this year. It went into effect on October 1, 2008.
This program is set up to help homeowners in trouble. Under the program, some homeowners can qualify for new 30-year fixed-rate
mortgages insured by the Federal Housing Administration. However, this new program can help you only if you qualify and your
lender agrees to forgive part of your debt. Although these new loans could help thousands of homewoners nationwide, they will
not help everyone.
How can I find out if I can get an H4H loan?
Contact your lender or a trust-worthy lender that provides FHA-backed loans. Again, a lender has the option of offering
you one of these loans, or not. Also, your current lender is not required to accept the trade-offs; he can say no to the deal.
Here are some of the basic program guidelines:
- This home is your primary residence; you do not own other residential property.
- Your existing mortgage was originated on or before January 1, 2008, and you have made at least six payments.
- You are not able to pay your existing mortgage without help.
- As of March 2008, your total monthly mortgage payments due were more than 31 percent
of your gross monthly income.
- You must agree to share with FHA both the equity created at the beginning of this new mortgage and any future
appreciation in the value of the home.
- The new mortgage will not be more than 90 percent of the new appraised value including any financed Upfront Mortgage Insurance Premium.
- You have not been convicted of fraud in the past 10 years, have not intentionally defaulted on debts, and did not
knowingly or willingly provide material false information to obtain your existing mortgage(s).
- The loan amount may not exceed a maximum of $550,440.
- The holders of existing mortgage liens must waive all prepayment penalties and late payment fees.
- The existing first mortgage must accept the proceeds of the HOPE for Homeowners loan as full settlement of all outstanding indebtedness.
- Existing subordinate lenders must release their outstanding mortgage liens.
- You cannot take out a second mortgage for the first five years of the loan, except under certain circumstances for emergency repairs.
Get more information about the H4H program from FHA. (FHA posts a list of participating lenders. As of October 24, 2008,
there are only a few in Maine.)
'Hope for Homeowners,' Still Long in Coming (a more skeptical view from the Washington Post)
A Program to Keep the Roof Over Your Head -- but It Will Cost You in the Long Run (beware of the long-term costs)
Beware of websites that claim to be "official" but may be leading you toward more bad loans. Be sure that you
are getting information from government sites, or other reliable sources. Or get free answers to your questions from a
member of the
Maine Housing Counselor Network.
More: Beware of Foreclosure Rescue Scams
