Ways to avoid Foreclosure A Look at the Foreclosure Process Foreclosure Relief Options The HOPE for Homeowners Program How to Recognize Foreclosure Rescue Scams

Understanding HOPE for Homeowners

houseAs many homeowners find themselves in need of assistance to retain their homes, a number of aid programs have arisen to help homeowners facing foreclosure; HOPE for Homeowners is one such program. The program is offers financially strapped homeowners an opportunity to refinance their mortgages through the federal government.  The Federal Housing Administration (FHA) administers the program and offers a 30-year fixed rate mortgage to homeowners who cannot afford their current mortgage. Guidelines of the program ensure that qualified homeowners receive a fixed rate mortgage with monthly payments that are below 31 percent of the homeowner’s monthly income. This program is only available until September 30, 2011.

To qualify for HOPE for Homeowners, homeowners must meet certain criteria, like:

Additional information about the specific criteria for HOPE for Homeowners eligibility can be found at http://www.hud.gov/hopeforhomeowners/consumerfactsheet.cfm.

While the HOPE for Homeowners program sounds like a great option for homeowners facing financial difficulties and foreclosure, a homeowner must agree to substantial concessions in order to obtain this loan.

First, the FHA requires homeowners to share the equity in their home (equity is assessed at the time of the loan’s origination).The percentage of equity demanded by the FHA varies based on how long the home is owned by the homeowner. If a home is sold within 1 year of obtaining a HOPE for Homeowners loan, the homeowner must hand over 100% of the home’s equity to the FHA; if a home is sold within two years, the homeowner must give the FHA 90% of the home’s equity; if a home is sold within three years, the homeowner must give the FHA 80% of the home’s equity; and so on. The amount of equity the FHA is entitled to goes down in 10 percent increments after the first five years of the loan. After five years, the amount of equity the FHA is entitled to remains at 50 percent. That means, if you decide to sell your house 15 years after you refinance with HOPE for Homeowners, the FHA will still receive 50 percent of your home’s equity.

Second, the FHA requires homeowners to share future home price appreciation. According to stipulations of HOPE for Homeowners, the FHA is entitled to half the amount your home appreciates in value. In other words, if you sell your home for $250,000 when it was originally valued at $200,000 (at the time you obtained your HOPE for Homeowners loan), your home appreciated $50,000 in value; the FHA is entitled to $25,000 and you will keep the remaining $25,000.

It is a good idea to contact an experienced bankruptcy attorney to learn more about bankruptcy and how to avoid home foreclosure. A bankruptcy attorney should be able to provide you with the information you need to make the wise decisions about your particular situation.