fha training hope for homeowners december 2008. housing and economic recovery act of 2008 hope for...
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Housing and Economic Recovery Act of 2008
Hope for Homeowners Overview
A temporary program to assist struggling homeowners remain in their homes by refinancing to a safe and affordable FHA insured mortgage
Program oversightSecretaries of Treasury and HUDChairpersons of Board of Governor’s for
Federal Reserve and Board of Directors of the FDIC
Hope for Homeowners Overview (Cont.)
Built on five principles Long term affordability – ability to repay No investor/lender bailout No windfall for borrower’s new equity shared
with FHA Voluntary participation by lenders Restore confidence and liquidity to mortgage
market
Hope for Homeowners Overview (Cont.)
Participation by lenders in program is voluntary Existing lien-holder(s) must accept proceeds of
new FHA loan as satisfaction of all existing liens All penalties and fees related to default or
delinquency must be waived or forgiven On existing loans By existing lenders
Hope for Homeowners Program Guidelines
Implementation date October 1, 2008
Expiration date September 30, 2011 Maximum loan-to-value
96.5% if debt ratios </= 31%/43%90% if debt ratios > 31%/43%
Includes Up-Front MIP Includes closing costs
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Hope for Homeowners Program Guidelines (Cont.)
Existing mortgage must have originated on or before January 1, 2008
Owner-occupant only Borrower may not own or have interest in any other
property Second homes Rental property Co-borrower or co-signer on other property
Hope for Homeowners Program Guidelines (Cont.)
Current housing debt must be > 31% as of 3/1/08 New FHA-insured mortgage may not exceed
$550,400 (132% of 2007 conforming loan limit) New FHA-insured mortgage must be a fixed rate New FHA-insured mortgage may be 30 or 40 year
term based on affordability
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Hope for Homeowners Program Guidelines (Cont.)
Debt ratios may not exceed 96.5% Loan To Value
31% Housing (PITI & Monthly Mortgage Insurance)
43% All Debt (PITI, MMI, and consumer debt)
Hope for Homeowners Program Guidelines (Cont.)
Debt ratios may not exceed 90% Loan-To-Value
38% Housing (PITI & Monthly Mortgage Insurance
50% All Debt (PITI, MMI, and consumer debt)
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Hope for Homeowners Program Guidelines (Cont.)
Compensating factors not applicable 96.5 or 90% Loan-to-Value
Board has option to amend Already amended once
90% maximum to 96.5 Based on debt ratios
Board may amend again in future
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Hope for Homeowners Program Guidelines (Continued)
Borrower(s) must certify They did not intentionally default on the existing
mortgage(s) They did not knowingly provide false information
for the existing mortgage(s)To be signed twice (at time of application and at
closing)
Hope for Homeowners Program Guidelines (Continued)
Income must be documented Most recent two years tax returns Mortgage may not exceed reasonable
ability of borrower to make payments Underwriter will review income to
determine if borrower qualified for current loan based on actual income
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Hope for Homeowners Mortgage Insurance Premiums
Upfront mortgage insurance premium 3%
Annual mortgage insurance premium 1.5% of outstanding loan balance
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Hope for HomeownersShared Equity with FHA
FHA shares initial equity 10% initial equity is 100% to FHA
Decreases 10% per year throught the 5th yearFHA then holds 50% of initial 10% equity
until paid offBorrower may be able to buy out this initial
equity at some time in the future, but no sooner than 12 months
FHA will not subordinate to any future subordinate financing
Hope for Homeowners Shared Appreciation With FHA
As a condition of the H4H loan FHA shares in all future appreciation Share is 50/50 between FHA and
borrowerDoes not change over timeNo amount capsShared appreciation cannot be paid
off except Sale or disposition of property
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Hope for Homeowners Shared Appreciation With FHA
Borrower may be able to borrower 50% of their 50% appreciation plus a percentage of any capital improvements
No earlier than five years from the date of the H4H mortgage
FHA will not subordinate to any future subordinate financing
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Hope for Homeowners Shared Appreciation With FHA
Current junior lienholders only may also be able to share in future appreciation Board established standards for sharing
future appreciation Induce subordinate liens to exit the
property now so borrower can retain home
Ranges from 9% to 12% on the dollar Paid to junior lienholder in future
At time of sale or disposition of property Board may amend
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Final Notes on Hope for Homeowners
This is a loss mitigation tool only Originators can only earn a maximum of
1% origination fee No miscellaneous fees allowed
Administration, YSP, underwriting, processing, etc.
Borrower may be subject to tax liability Debt forgiveness
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Final Notes on Hope for Homeowners Lender must evidence borrower made first
payment from own funds before FHA will insure Cannot be funded at time of close and held
by escrow FHA will not pay claim in the event of first
payment default Ginnie Mae pool to sell loan to recently
established Rates expected to be 8.5% - 9%
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