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New FHA Loan Program: HOPE for Homeowners for Foreclosures Prevention

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Nationwide Mortgage Loans introduces the new FHA loan program, HOPE for Homeowners and loan modifications that should help reduce foreclosures across the country. Congress finally raised the loan limits for FHA home loans offer a unique opportunity for homeowners to refinance into a lower interest rate loan that is fixed with 15 or 30-year terms. The FHA mortgage lender is excited to release this FHA loan  program because it is an alternative to foreclosure preventions like loan modifications that can take up to 90 days.  Homeowners can execute a rate and term refinance loan up to 97.5%.

If financing a new home, applicants can also buy a home with less than 3% down.  The President recently signed into legislation a mortgage refinance program that will enable the Federal Housing Administration to continue providing targeted foreclosure prevention to homeowners. The Hope for Homeowners loans will expand on FHA’s existing guidelines that have been assisting distressed homeowners that are trapped in mortgage loans they can no longer afford. Under this FHA loan program, certain borrowers struggling with their home loan would be eligible to refinance into fixed FHA-mortgage loans that they can afford. The FHA Hope for Homeowners program was rolled be out October 1, 2008.

This unique government insured mortgage product allows homeowners to escape their adjustable rate mortgage that has been draining their savings. FHA mortgages were created by the HUD in 1934 with the goal of guaranteeing fair lending to all Americans regardless of their race or bank account.  FHA has always provided alternative home financing for first time homebuyers and borrowers with poor or limited credit.  Until Congress raised the loan limits, many people found it impossible to find low interest rates for a mortgage refinancing because their 1st and 2nd mortgages exceeded the FHA and conforming limits, but now the problem is equity.  Property values have declined to the point where the mortgage balances are now higher than the property values.

FHA Hope for Homeowners loans still maintains the long-standing requirement that new loans be based on a family’s long-term ability to repay the mortgage. FHA only offers this program to borrowers who will be occupying the property. In addition, applicants must meet the following criteria below:

  • Home mortgage must have originated on or before January 1, 2008;
  • Their home loan debt-to-income must be at least 31 percent;
  • They cannot afford their current mortgage
  • They did not intentionally miss mortgage payments
  • Borrowers cannot own 2nd homes.

Features of FHA-mortgage loans under the new program include:

  • 30-year, fixed rate mortgage;
  • Maximum 90 percent loan-to-value ratio;
  • No prepayment penalties;
  • $550,440 maximum mortgage amount;
  • Extinguishment of any second mortgage liens;
  • New home appraisals from FHA-approved appraisers.

According to former Ditech executive, Jeff Morris, “Mortgage lenders are out of touch with the reality of American borrowers, because most homeowners no longer meet the requirements for income or home values.”  31% Debt to income ratios and full income documentation are difficult requirements in this economy.   If you do not qualify these FHA loan requirements, consider a mortgage loan modification that allows debt to income ratios as high as 100%.

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