HOPE for Homeowners
Last October, the federal government started a new
initiative last called HOPE for Homeowners, which could save as many as 400,000
American mortgage borrowers. The program authorizes the Federal Housing Authority to back adjustable rate mortgage (ARM)
loans in danger of failure.
It works like this: a worried homeowner contacts a HOPE representative.
The representative works with the lender and voluntarily gets them to agree to write down the loan
balance to 90 percent of the current value of the home. Then, they refinance the original mortgage
into an FHA-guaranteed 30-year fixed rate mortgage with predictable monthly payments. As the value
of the home appreciates in the future, the homeowner agrees to share some of that equity with the
government.
In order to qualify for this program, borrowers must be able to fully document their income, occupy
the property involved (investment properties do not qualify), and after the refinance their
housing costs must not total more than 31 percent of their income (38 percent if they
participate and in a 3-month trial period with timely payments).
Borrowers interested in participating in this FHA program should contact their lenders, speak with a HUD
counselor, or call 1-888-995-HOPE.