WASHINGTON (10/27/08)--The Federal Housing Administration’s (FHA’s) new Hope for Homeowners (H4H) Program lets lenders refinance certain delinquent mortgages to help borrowers hang onto their homes. But what lenders are eligible to participate? Are credit unions among them? In its October Compliance Challenge
, the Credit Union National Association (CUNA) advises credit unions regarding who is an eligible lender, as well as who is an eligible borrower. All FHA-approved lenders are allowed to originate mortgages under the temporary H4H program--so credit unions that offer FHA loans are qualified. All lender participation is voluntary. The program was created by the Housing and Economic Recovery Act of 2008, signed into law in July. The H4H website lists 78 lenders that have been cleared to participate in the program. It has also been reported that the FHA is fielding roughly 1,000 calls a day from interested borrowers. Under the program, certain borrowers facing difficulty in paying their mortgages will be eligible to refinance into a 30-year fixed rate FHA-insured mortgage. The H4H Program is effective for endorsements on or after Oct. 1, 2008 through Sept. 30, 2011. CUNA notes that borrowers may be eligible if, among other factors:
* The home is their primary residence, and they have no ownership interest in any other residential property, such as second homes; * Their existing mortgage was originated on or before January 1, 2008, and they have made at least six payments; * They are not able to pay their existing mortgage without help; * As of March 2008, their total monthly mortgage payments due were more than 31% of their gross monthly income; and * They certify they have not been convicted of fraud in the past 10 years, intentionally defaulted on debts, and did not knowingly or willingly provide material false information to obtain their 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 lender must accept the proceeds of the H4H loan as full settlement of all outstanding indebtedness; * Existing subordinate lenders must release their outstanding mortgage liens; * The borrower 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; and *The borrower cannot take out a second mortgage for the first five years of the loan, except under certain circumstances for emergency repairs.
Use the resource links below for more detailed information on the new program.