HOPE for Homeowners (H4H) Act of 2008

April 2009 update: NPR reports that, after six month, only one homeowner in the country had benefitted from this program. This confirms many advocates' earlier arguments that the program was too limited. The House has passed amendments that could make the program work better for more homeowners. As of mid-April this bill to amend was still pending in the Senate. In the meantime many are looking to the alternative Making Home Affordable plan to help some homeowners with reasonable loan modifications. Go to complete NPR news story on failure of H4H program and the proposed amendments.

Congress passed a foreclosure relief program that went into effect on October 1, 2008. This program is set up to help homeowners in trouble. Under the program, some homeowners can qualify for new 30-year fixed-rate mortgages insured by the Federal Housing Administration. However, this new program can help you only if you qualify and your lender agrees to forgive part of your debt. Although these new loans could help thousands of homewoners nationwide, they will not help everyone.

How can I find out if I can get an H4H loan?

Contact your lender or a trust-worthy lender that provides FHA-backed loans. Again, a lender has the option of offering you one of these loans, or not. Also, your current lender is not required to accept the trade-offs; he can say no to the deal.

Here are some of the basic program guidelines:

• This home is your primary residence; you do not own other residential property.
• Your existing mortgage was originated on or before January 1, 2008, and you have made at least six payments.
• You are not able to pay your existing mortgage without help.
• As of March 2008, your total monthly mortgage payments due were more than 31 percent of your gross monthly income.
• You must agree to share with FHA both the equity created at the beginning of this new mortgage and any future appreciation in the value of the home.
• The new mortgage will not be more than 90 percent of the new appraised value including any financed Upfront Mortgage Insurance Premium.
• You have not been convicted of fraud in the past 10 years, have not intentionally defaulted on debts, and did not knowingly or willingly provide material false information to obtain your existing mortgage(s).
• The loan amount may not exceed a maximum of $550,440.
• The holders of existing mortgage liens must waive all prepayment penalties and late payment fees.
• The existing first mortgage must accept the proceeds of the HOPE for Homeowners loan as full settlement of all outstanding indebtedness.
• Existing subordinate lenders must release their outstanding mortgage liens.
• You cannot take out a second mortgage for the first five years of the loan, except under certain circumstances for emergency repairs.

Get more information about the H4H program from FHA. (FHA posts a list of participating lenders. As of October 24, 2008, there are only a few in Maine.)

'Hope for Homeowners,' Still Long in Coming (a more skeptical view from the Washington Post)

A Program to Keep the Roof Over Your Head -- but It Will Cost You in the Long Run (beware of the long-term costs)

Beware of websites that claim to be "official" but may be leading you toward more bad loans. Be sure that you are getting information from government sites, or other reliable sources. Or get free answers to your questions from a member of the Maine Housing Counselor Network.

More: Beware of Foreclosure Rescue Scams

Notice © Pine Tree Legal  Assistance April 2009 Sometimes the laws change. We cannot promise that this information is always up-to-date and correct.  If the date above is not this year, call us to see if there is an update. We provide this information as a public service.  It is not legal advice.  By sending you this information, we are not acting as your lawyer.  Always consult a lawyer, if you can, before taking legal action. Please review our full terms-of-use agreement

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