Hope for Homeowners is the widely discussed FHA refinance loan that requires lenders to reduce the principle mortgage balances down to 90% of today’s appraised value.
Fox Business New’s Rich Edson reports on Rep. Barney Frank’s work to overhaul the Hope for Homeowners program.So far, this FHA loan program has been unsuccessful.FHA lenders offering the H4H home refinancing product would have to reduce the mortgage balance to 10% below the current market value.
Government eliminates some liability for mortgage lenders who participate in this FHA loan program design to minimize the foreclosure crisis with a loan modificationtype solution for struggling homeowners.
FHA mortgage rates remain very attractive for borrowers who do not have much home equity left. Qualifying for a home loan that is fixed for 30 years is still a great day for home financing. FHA home loans enable borrowers with less than perfect credit qualify for home refinancing. Gone are the days of the zero down home loans that enable homeowners to consolidate credit card debt or take out a cash out second mortgage that homebuyers would have to quickly refinance.
FHA continues to offer great 1st time homebuyer programs with new home financing requiring only 3.5 percent down. FHA mortgage lenders remain optimistic that Hope for Homeowners may help some of their borrowers prevent foreclosure. Home financing guru, Jason Cardiff said, whether its FHA or a loan modification, homeowners need to get up and do something to stop foreclosure.Cardiff continued, “Lenders are offering loan workouts like we’ve never seen before, so contact a mortgage lender to refinance or seek counsel from a law firm that has a good track record of loan modifications with your mortgage lender.”
Federal Rate Cut Lead to Lowest Mortgage Rates Ever
The Federal Reserve cut the federal funds interest rate on Tuesday The Fed cuts the benchmark interest rate to nearly zero, and CNBC’s Diana Olick said this might help lower mortgage rates. Susan Wachter, a professor of real estate, finance and city and regional planning at the Wharton School of the University of Pennsylvania, said cutting the interest rate will help change the housing market and move toward a bottom on housing prices, although it may take a while for banks to start originating much need mortgage loans. Olick added that to get those cheap rates, buyers must have impeccable credit and money to put down on the home loan.
FHA home loans will be the only opportunity for non-prime refinancing, but even the FHA loan guidelines are tighter in 2009.HUD requires 2 full URAR appraisals for FHA cash out refinance loans that exceeds 85% loan to value.Borrowers can still use FHA loans for cash refinancing up to 95%, but two appraisals slows the process down and increases the closing costs as well.Many FHA lenders are reporting minimum credit score requirements implemented for higher risk FHA home mortgages.FHA mortgage rates for purchase or refinance are being reported with fixed rates as low as 4.5% on thirty year home mortgages.
Metro Housing of Flint is a non-profit agency. If you’re about to refinance, they suggest waiting until Wednesday before locking in your mortgage rates. “It’s going to be an impact day, and you’re going to see the interest rates hover and loan officers remain excited because of the significant amounts opportunity for home refinancing. It’s going to be a big day,” Crews predicted. If you have bad credit, or if your mortgage balance is greater than what your house is actually worth, qualifying for a refinance loan will be impossible.Mortgage rates are low, but lending guidelines are tighter than ever.Mortgage refinancing can be tricky, but not impossible. “Every time there’s a strategy. What happens is we don’t want to do the strategy, and we want to do it now, but we have to take the steps and get there,” Crews advised.
To ease the confusion, Metro Housing is offering free seminars titled “Know Your Loan, Save Your Home.”“We need to know what your rates are. We need to be able to look at your credit, and what the recapture period is. Then we can figure out what products can get you back to a safe place,” Crews explained.If mortgage rates drop again on Wednesday, there’s no way of knowing just how long they will remain that low. Metro Housing’s best advice is to get your act together now, before you miss your opportunity and it’s too late.“Know your mortgage. If you don’t take action, it will pass you by,” Crews said.
Why the Fed Meeting Matters so Much… Former Dallas Fed President Gerald O’Driscoll talks about what to expect from the next Federal Reserve meeting.
Obama has made clear that he understands how paramount the FHA mortgage loan system is for revitalizing the housing markets from a local and national level.Low interest rates and comprehensive FHA loan programs are essential for America to rebuild its credibility with homeowners and new homebuyers.Most mortgage insiders believe that Obama understands the importance of recapturing property values that will help many families get back on their feet. The Obama Administration will likely move quickly to reestablish credibility for American home financing.FHA mortgage rates remain at the lowest levels ever.Today a qualified borrower could take out a FHA mortgage with a fixed interest rate for thirty years at 4.75%.
Many believe that Barrack should review a few of the FHA home loan products and provisions to see which loan programs are succeeding and which products are missing the mark. Hope for Homeowners was a program passed over the summer as part of the FHA mortgage reform package. In a recent report, FHA loan pros said that as of “October 1st and HUD has allegedly allotted 22 people to the program.”They would not confirm it, but clearly their reports and articles were blowing much needed whistles on the government loan relief programs that were supposed to be saving homes and giving new opportunities to homeowner that were able to qualify for home refinancing.
According to congressional testimony by James A. Heist, HUD’s assistant attorney inspector general for audit, “it is our understanding from the Department that funding for 22 staff positions and approximately $20 million for system improvements have been made available for the Hope for Homeowners program.”Mr Heist does not say HUD has actually deployed 22 people to work on the H4H program, he only says “it is our understanding” that money has been made available for this purpose. This is hardly re-assuring and, in fact, there is no evidence that anyone at HUD is actually doing anything. How do we know? Well HUD’s figures as of December 31st — three full months after the H4H program began — show there have been 370 program applications but that “no Hope for Homeowners cases have been insured to date.”Look for Congress to investigate the Hope for Homeowners program and while they’re at it expect them to review the FHA Secure loans as well.
The average FHA mortgage rate for a thirty-year home loan dropped below 5% this week.Mortgage Brokers Network executive, Steve Park said, “This is a rare opportunity to revive the mortgage industry because interest rates have dropped to record levels that have not been available for the last forty years.” Homeowners across the country realize this rare financing opportunity, so thousands of borrowers are rushing to lock into this monumental era that could spur a much needed home refinancing boom.
Today, the biggest obstacle for most borrowers is credit. In many cases, conventional lenders have credit score requirements seeking credit scores over 680.In this dried up credit markets, even professionals like doctors or lawyers have found it difficult to qualify for a traditional mortgage. If you’re interested in a refinancing mortgage, it is imperative that you have good or excellent credit and the ability to be able to provide documentation for income that lending underwriters deem sufficient.
FHA still offer a refinancing opportunity for borrowers with good or bad credit can qualify for a FHA home loan that is fixed for thirty years.The most popular FHA loan allowing refinancing is the FHA mortgage that requires borrowers to be at 97% loan to value for the standard FHA rate and term refinancing and 95% cash out refinancing would require home owners to have at least 5% left in your home equity.However in some cases the FHA lender will require two appraisals for cash out refinancing above 85% loan to value.
If you have no equity available because of the declining home value, consider the Hope for Homeowners program insured by FHA.This unique program enables homeowners who have mortgage balances greater than the appraised amount.If you are unable to qualify for Hope for Homeowners, consider a loan modification, because credit scores and late payments will not prevent you from renegotiating your mortgage rate.
Accepting these new criteria was hardly voluntary. The Fed warned the banks: “Did You Know? Failure to comply with the Equal Credit Opportunity Act or Regulation B can subject a financial institution to civil liability for actual and punitive damages in individual or class actions. Liability for punitive damages can be as much as $10,000 in individual actions and the lesser of $500,000 or 1 percent of the creditor’s net worth in class actions.”
FHA mortgage refinance tends to follow the most flexible underwriting criteria permitted under with government and FHA guidelines. When necessary — in cases where FHA loan applicants have no established credit history, for example — FHA allows nontraditional credit, a practice now accepted by most government lending institutions.
Credit History: When considering past credit problems FHA mortgage lenders should review isolated circumstances. For lower–income applicants in particular, unforeseen expenses can have a significant effect on an overall good credit history. When looking at a refinance transaction that pays off past collections and high rate credit card debts, the debt to income ratio would be reduced significantly.
Sources of Income: In addition to primary employment income, FHA, Fannie Mae and Freddie Mac will accept the following as valid income sources: overtime and part–time work, second jobs (including seasonal work), retirement and Social Security income, alimony, child support, Veterans Administration (VA) benefits, welfare payments, and unemployment benefits.
Credit scores. While credit scores can be an analytical tool with conforming loans, their effectiveness is limited with Community Reinvestment Act loans. Unfortunately, Community Reinvestment Act loans do not fit neatly into the standard credit score framework…Given these mortgage lending practices mandated by the Federal Reserve and encouraged by FHA Fannie Mae and Freddie Mac, the resulting financial problems for financial institutions such as Countrywide, Indy Mac, Bear Stearns and WAMU are not that shocking.
With FHA, cash out refinancing is available to 95%. FHA streamline refinance loans, rate and term refinancing and home purchase loans are available to 97.5% loan to value.
Refinance and Avoid a Foreclosure
Don't ignore the letters from your lender Contact your lender immediately.
Contact a HUD-approved Housing Counseling Agency
