More Hope for Homeowners

November 21, 1:15 PMResidential Real Estate ExaminerMichele Lerner

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The US Department of Housing and Urban Development announced modifications to the Hope for Homeowners Program intended to make the program more helpful for frustrated homeowners who have been unable to modify their loans to make them more affordable.

Changes to the Hope for Homeowners program should reduce costs for consumers and lenders and expand eligibility for loan modifications.

Some of the changes include:

1. increasing the loan to value ratio to 96.5% for borrowers whose mortgage payments represent no more than 31% of their monthly gross income; and have an overall household debt of no more than 43% of their monthly gross income
2. simplfying the process to remove subordinate liens by permitting upfront payments to lienholders
3. allowing lenders to extend mortgage terms from 30 to 40 years

What stays the same in the Hope for Homeowners program?

1.  borrowers with higher debt loads may have a loan to value ratio of 90% if their debt -to-income ratios are as high as 38% (mortgage payments to gross monthly income) and 50% (overall household debt to gross monthly income).
2. loans will only be available for owner-occupied homes
3. the loans will all be government-insured, fixed-rate loans from the FHA. (Federal Housing Administration)
4. as always, FHA loans are approved based on a family's long-term ability to repay the mortgage.