WASHINGTON (10/8/08)—The Federal Housing Authority (FHA) has unveiled rules for its statutorily mandated temporary foreclosure relief program—HOPE for Homeowners, effective Oct. 1 to Sept. 30. The program, referred to as H4H on the FHA website, was created this summer when Congress passed the Housing and Economic Recovery Act. It is intended to help borrowers who are at risk of default and foreclosure to refinance into more affordable, sustainable loans. Credit unions, banks and thrifts are eligible to participate in the program, but must be FHA lenders to do so. However, to date, few credit unions FHA-approved lenders. A list of participating lenders is not available yet, but has been promised “in the coming days” by the FHA. According to FHA, there are four ways that a distressed homeowner could pursue participation in the HOPE for Homeowners program:
* Homeowners may contact their existing lender and/or a new lender to discuss how to qualify and their eligibility for this program. *Servicers working with troubled homeowners may determine that the best solution for avoiding foreclosure is to refinance the homeowner into a HOPE for Homeowners loan. * Originating lenders who are looking for ways to refinance potential customers out from under their high-cost loans and/or who are willing to work with servicers to assist distressed homeowners. * Counselors who are working with troubled homeowners and their lenders to reach a mutually agreeable solution for avoiding foreclosure.
It has been estimated that as many as 400,000 homeowners over three years could avoid foreclosure through this program by refinancing loans into new 30-year fixed rate loans with lower payments. The FHA information provides the requirements lenders must meet to make these types of loans, including additional consumer disclosures and certifications to the FHA that there has been proper underwriting. It is expected that the program will be tweaked as any need of modifications becomes apparent. The Credit Union National Association (CUNA) has been contacted by the FHA and will work with the FHA to provide more information to credit unions on the H4H program in the coming weeks. The FHA is part of the Department of Housing and Urban Development. Use the resource link below to read more program details.