HUD and the Hope Ownership Program

The FHA has been working to make it more affordable for people to keep their homes in this time of economic crisis. The federal government is implementing new programs in order to allow current homeowners to refinance their mortgage loans into more affordable fixed rate government insured loans. HUD has begun the Hope Ownership Program in order to allow people who are in danger of losing their homes to refinance.

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Loan Type: Home Purchase FHA Refinance

Property State:

One of the largest problems in the current economy is the rising home foreclosure rate. When people lose their jobs they can no longer pay their monthly mortgage payments and unfortunately their homes are foreclosed and they not only lose their home, but the wealth they had built into the equity of their home. Then even if they become gainfully employed again they can not purchase another home because their credit is scarred from the foreclosure. The FHA is trying to stop this from happening by implementing the Hope Ownership Program.

Here are some details about how the Hope Ownership Program intends to help homeowners who are in danger of losing their homes to foreclosure due to the loss of a job, predatory lending, illness, or any other reason:

  • People with current high interest rate or adjustable rate mortgage loans can refinance with a FHA approved lender. The FHA will then guarantee the loan so that the lender is more likely to finance the loan even with bad credit and other unfavorable circumstances.
  • The new mortgages must be 30 year fixed loans to avoid problems in the future with adjustable rates.
  • The maximum loan amount is set at $550,440. A borrower can not finance more than this amount.
  • There are no prepayment penalties allowed in the mortgage contract.
  • The program begins on October 1, 2008 and the FHA recommends that if you are in default or financial trouble now that you contact your lender immediately and work out arrangements until the program begins and then you can get relief from refinancing.
  • In order to use this program you must have obtained your mortgage before January 1, 2008.
  • Your mortgage cost must be at least 31% of your income.
  • You will need to pay 3% of the loan amount at closing as a premium for mortgage insurance, and another 1.5% annually.
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This program is different from the FHA Secure Program in that HUD hopes to help more people keep their homes by offering more refinancing options to those who want to recover from bad financial circumstances.

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