Over the past decade homeowners have purchased some pretty shaky mortgage products, and mortgage lenders have put people into homes that they could ill afford. The current housing collapse is a symptom of these poor decisions, but now there is hope for families faced with losing their homes.
A new program called "Hope for Homeowners Program," legislated by Congress, came into effect on October 1, 2008 and will continue through September 30, 2011. This program offers hope to the millions of homeowners who are at risk of losing their homes.
The H4H program provides for the refinancing of homes through affordable mortgages so that those homeowners who are on the cusp of financial ruin can remain in their homes by entering into a 30-year fixed-rate loan with significantly lower payments.
According to the Federal Housing Administration, there are four ways you can participate in this program:
* "Homeowners may contact their existing lender and/or a new lender to discuss how to qualify and discuss their eligibility for this program.
* Services 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.
The primary way homeowners will initially participate in this program is through the servicing lender on their existing mortgage. Servicers that do not have an underwriting component to their mortgage operations will partner with an FHA-approved lender that does."
How does this work? Basically, the lender would write a mortgage with an appraised value of up to 90%. The FHA appraiser would re-appraise your home and then the discounted amount would be paid by the government. Ultimately, the mortgage would become a 30-year fixed rate mortgage. Besides being able to remain in your home, you will receive 10% equity in your home as well. In addition, you would not incur any penalties or late fees.
To find out if you qualify, you can go to the FHA website at: http://portal.hud.gov/portal/page?_pageid=73,7601299&_dad=portal&_schema=PORTAL
A question to ask yourself is if you are willing to allow the government save your home. While on the surface the Hope for Homeowners Program appears as a socially responsible answer to a difficult problem, the question remains whether not addressing the real problem of how homeowners got themselves into this mess is the correct course of action.
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