What is Hope for Homeowners?

Hope for Homeowners is a program that is administered by the United States Department of Housing and Urban Development (HUD) and that helps families having trouble paying their mortgages. This can happen when a family member experiences a job loss, serious illness or other unforeseen emergencies that lead to a decrease in income or an increase in costs. This assistance is based on the borrower's ability to pay. Anyone interested in the program should find out the requirements before a foreclosure becomes imminent.

Hope for Homeowners is not a loan forgiveness program. Rather, it is a refinancing plan. Certain requirements must be met for homeowners to qualify.

As of October 2010, the basic requirements to qualify for Hope for Homeowners included having a mortgage that originated on or before Jan. 1, 2008, an inability to pay the current home loan, no intentionally missed mortgage payments and no ownership of another home. There must also have been at least a 31 percent debt-to-income level for the mortgage. Other criteria might apply as well.

The Hope for Homeowners program works by encouraging a lender to adjust a current mortgage down to 90 percent of the new value for the home. The idea is to give the lender an option that is more financially beneficial than a foreclosure. A lender’s participation in the program is voluntary. This means that even if the government approves an application, the lender still has the option to reject it.

Generally, the terms of the loans are a 30-year fixed rate, a maximum loan-to-value ratio of 90 percent, zero prepayment penalties, forgiveness of subordinate liens and a new home appraisal from an appraiser who is approved by the Federal Housing Administration (FHA). The loans are insured by the FHA. In addition, HUD, the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the U.S. Department of The Treasury can institute additional requirements.

An economic downturn that began in 2008 led to an increase in foreclosures in the U.S. In addition to helping homeowners, the Hope for Homeowners program was designed to help slow the number of foreclosures. To help meet this goal, the FHA was expected to insure up to $300 billion US Dollars in new mortgage loans. Borrowers could expect to pay 3 percent of the original mortgage, along with an annual 1.5 percent premium on the outstanding mortgage.

The government urges families to apply for Hope for Homeowners as soon as difficulties arise. Eligibility for Hope for Homeowners can be determined by contacting HUD. Additional information can be found online at HUD's website or through a HUD-approved agency.