How the Program Works

There are four ways that a distressed homeowner could pursue participation in the HOPE for Homeowners program

1. Homeowners may contact their existing lender and/or a new lender to discuss how to qualify and their eligibility for this program.
    
2. Servicers working with troubled homeowners may determine that the best solution for avoiding foreclosure is to refinance the homeowner into a HOPE for Homeowners loan.
    
3. 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.
    
4. Counselors who are working with troubled homeowners and their lenders to reach a mutually agreeable solution for avoiding foreclosure.
    

It is envisioned that 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.

• The loan will be for 90% of that new appraised value (LIKE BEFORE) but instead of the 10% down payment, the F.H.A. lender will hold a second for the other 10%. This is called the SEM (Shared Equity Mortgage), and is defined as the difference between the appraised value and the new mortgage amount not exceeding 90% of that appraisal. This is to be recorded as a second lien by the originating lender. Depending upon how long you will keep the property before selling or refinancing it, you will get portion back of the 10% up to a 50/50 split, see the example below

1. Let’s say your home has an appraised value at the time you receive your FHA mortgage of………….	$200,000.
2. And your mortgage is 90% of this, or……....	$180,000.
3. This means the initial equity is the difference between 1 and 2, or………………………………..	$20,000.

In this example, you and the FHA share this $20,000 when you sell your home or refinance your loan. Here’s how that $20,000 would be split:

If you sell or refinance:  

During Year 1	FHA receives 100%, or	$20,000	You receive 0%, or	$0
During Year 2	FHA receives 90%, or	$18,000	You receive 10%, or	$2,000
During Year 3	FHA receives 80%, or	$16,000	You receive 20%, or	$4,000
During Year 4	FHA receives 70%, or	$14,000	You receive 30%, or	$6,000
During Year 5	FHA receives 60%, or	$12,000	You receive 40%, or	$8,000
After Year 5	FHA receives 50%, or	$10,000	You receive 50%, or	$10,000

So, if you sell or refinance right after receiving the new loan, the FHA keeps the equity that was created, and you don’t receive any of it. On the other hand, let’s assume you stay in this loan and don’t sell or refinance for ten years. At that point, you’re entitled to half of the equity – in this example, that’s $10,000 – and the FHA is entitled to the other half.

As another condition of this new program, the borrower must share with HUD 50 percent of any future property appreciation (as we all know and hope real estate will go up again, that is a fact) upon sale, refinance or disposition of the property. This is a 50/50 split that does not change over time. 

This is a very strict program with very demanding requirement in order to qualify. To learn more and to receive (FREE AND OVER THE NET) the full 13 the requirement pamphlet PLEASE FILL OUT THE FORM BELOW