Understanding Hope for Homeowners Mortgage Rescue Program
Bills.com explains government program, other mortgage options
SAN MATEO, Calif., Oct. 22, 2008 – The U.S. government's new Hope for Homeowners program offers alternatives for Americans struggling with their mortgages, says Ethan Ewing, president of free online consumer portal Bills.com, and Bills.com can offer citizens explanations and awareness about alternatives.
In the United States, more than 700,000 residential properties faced foreclosure during the second quarter of 2008, according to RealtyTrac. Foreclosure filings are on the rise, as that figure is a 121 percent increase from the same quarter of 2007. The greatest damage is being done in states where prices had risen swiftly, including California, Nevada, Arizona and Florida. Nearly 2 million more homes have delinquent mortgages that put them at risk for foreclosure.(1)
"The intent of the Hope for Homeowners plan is to help homeowners who are at risk of losing their homes, while also working to stabilize the U.S. housing market," Ewing explained. "The plan will help some homeowners, but others who are straining to pay their mortgages can help themselves."
What is “Hope for Homeowners”?
Hope for Homeowners is a program of the Federal Housing Administration (FHA). Its goal is to help homeowners remain in their homes, while making mortgages more affordable. The program also seeks to limit the financial industry's losses from unstable loans and to stabilize housing markets by slowing the rate of foreclosures. Hope for Homeowners provides refinancing options for certain homeowners now through Sept. 30, 2011.
Who qualifies for help?
A qualifying homeowner is someone who resides in his/her home, does not own a second home, did not intentionally miss any mortgage payments, cannot afford the current loan payments, and has a mortgage debt-to-income ratio of at least 31 percent. That means that the homeowner’s total mortgage payment is 31 percent or more of monthly income. In addition, the mortgage must have originated before Jan. 31, 2008.
What does “Hope for Homeowners” offer?
Hope for Homeowners aims to make mortgages more affordable. The FHA encourages lenders to voluntarily write down homeowners' mortgages to 90 percent of the home's current value in order to provide some relief for owners in areas where home values have plummeted. Owners can qualify for a new, 30-year, fixed-rate mortgage (with the mortgage amount not greater than $550,440). There are no prepayment penalties on the new loan. The loan is insured by the FHA. For more details, visit http://www.hud.gov.
The Hope for Homeowners program is an extension of the FHASecure program, launched in 2007, that has helped nearly 300,000 homeowners who have missed payments because their adjustable-rate mortgage (ARM) interest rate spiked, according to the FHA.
Is there anything else I should know?
Yes. The reason for the write-down of mortgages to 90 percent value is that adjusting a mortgage to a lower value will, in many cases, be more cost-effective for lenders than forcing a consumer into a foreclosure process. Some markets are reporting that many homeowners are simply walking away from their houses rather than trying to keep up payments on their inflated mortgages – an action that can be costly for the mortgage owner in areas where real estate prices have fallen dramatically. Therefore, lenders are becoming more flexible in offering alternatives to homeowners in order to help them avoid foreclosure. Homeowners who could make payments on a loan with a lower interest rate, or on a loan that could be adjusted downward to the current market value amount, should call their lender to discuss possible resolutions.
About Bills.com (www.bills.com)
Based in San Mateo, Calif., Bills.com is a free one-stop portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt relief assistance, insurance, mortgages and other loans. As the online portal to Freedom Financial Network, LLC, the company has served more than 40,000 customers nationwide since 2002 while managing more than $1 billion in consumer debt. Its RSS feed is available at http://www.bills.com/news_releases/.
Bills.com holds the No. 257 spot on the Inc. 500 list for 2008, and the No. 3 spot on Entrepreneur Magazine’s Hot 100 list of the fastest-growing U.S. companies. Bills.com also was named a finalist as “most innovative company” in the American Business Awards in 2008. Company co-founders and co-CEOs Andrew Housser and Brad Stroh were named to the Silicon Valley/San Jose Business Journal's "40 Under 40" list in 2008, and are recipients of the Northern California Ernst & Young 2008 Entrepreneur of the Year Award.