 |
Homeowners struggling to avoid foreclosure have a potential lifeline: Hope for Homeowners, outlined last year by the Department of
Housing and Urban Development (HUD) to allow strapped borrowers to refinance
their mortgages into federally insured lower-rate, 30-year fixed loans.
The program has now been in place for the better part of a year, but despite its goal of helping hundreds of thousands of homeowners, recent congressional testimony established that it has been of little real benefit (less than 100 loans have been approved and funded as of February 2009).
The program is not law, but rather is a voluntary program in which individual lenders must choose to participate.
To be eligible:
(1) The borrower's home must be
the primary residence; the mortgage must have originated on or before
Jan. 1, 2008.
(2) as of March 2008, an applicant's mortgage payment
must account for more than 31 percent of gross monthly income.
The program essentially has the bank selling the loan to the federal government for 90% of the home's current value and the federal government carries the loan at a low 30 year fixed interest rate.
The catch is that you cannot sell the home at a profit within the first five years, and after that, any gains on the selling price of the home get split with the government 50/50.
The bank, rather than the homeowner, essentially takes the hit for the loss of value of the home.
_______________________________________________________
|
 |
