moh malekpour
Elite Member
- Joined
- May 25, 2002
- Professional Status
- Certified Residential Appraiser
- State
- California
The section of the new bill, which is called hope now, or foreclosure rescue is going to be in effect on Oct. 1, 2008 to keep folks with sub prime loans in their homes and since it is going to be an FHA refinancing, there is going to be an small hope for appraisers to get some assignments for those loans at the time that the appraisal activity is at its lowest level.
The designated budget for this rescue plan is $300 billion and is going to expire on Sept 30, 2011. Although the budget is huge and the time for the project is 3 years but I think most homeowners are not going to be qualified because of very difficult conditions for the qualification.
The following is a synopsis of the hope program:
1- the lenders of those sub prime loans have to voluntarily agree to write down principal and penalty fees on those loans before a homeowner can apply for the FHA hope loan. For example if the loan amount is $500,000 and the current appraised value of the home is $300,000; the lender has to agree to write down or forgive $200,000 and then the home will be refinanced by FHA at 90% of the appraised value with a conventional fixed rate loan . Lenders are saying that they are going to participate but when it comes to a real act, they might not to do it. If they agreed to participate in this program, they will require an appraisal on the property and upon that appraised or current market value, they are going to take their loss. They might to get a drive by appraisal before participating on this program to find out if it is in their advantage to participate in hope loan or let it go even if ends up to a foreclosure. The lender who is going to do the new FHA refinancing is not going to be the lender who made the original sub prime loan on that home. I don't know which lender is going to order for the appraisal of the property, the lender who is going to originate the new hope loan or the lender who is going to take the loss and let the homeower get the new FHA Loan.
2-homeowners must be current in their mortgages. If they are already foreclosed, it is too late to save them.
3-they must demonstrate the lack of capacity to pay their current payment. If they are not still able to pay for the new FHA loan, they cannot be helped.
4- their mortgage payment to their income ratio must be 35% or more. For example, if their income is $4000 per month, their monthly mortgage has to be $1400 or more. If it is less than $1400, they cannot get the hope loan.
5-they have to pay upfront insurance fee of 3% of new loan amount payable out of new financing proceeds.
6- they have to certify to the government that they haven’t intentionally defaulted on their current loan or any other debt in order to refinance with hope loan, anyone who lies in the application will be subject to 5 years jail.
7-they have to agree to occupy and live in the refinanced home as a principal residence and not own any other home.
8-they have to agree to share the appreciated profit or any equity gain with HUD upon the sale of that property.
9-since the FHA loan is at 90% of the appraised value, the new refinancing creates 10% equity for the homeowner instantly at the time of refinancing but homeowners cannot tap on that equity right away. If that home was sold in the first year, that 10% equity has to be paid back to FHA in full. If the home was sold within next 5 years, 50% of equity built up or appreciation has to be paid to FHA.
10-I guess, the original loan must be originated prior to Jan. 2008
The designated budget for this rescue plan is $300 billion and is going to expire on Sept 30, 2011. Although the budget is huge and the time for the project is 3 years but I think most homeowners are not going to be qualified because of very difficult conditions for the qualification.
The following is a synopsis of the hope program:
1- the lenders of those sub prime loans have to voluntarily agree to write down principal and penalty fees on those loans before a homeowner can apply for the FHA hope loan. For example if the loan amount is $500,000 and the current appraised value of the home is $300,000; the lender has to agree to write down or forgive $200,000 and then the home will be refinanced by FHA at 90% of the appraised value with a conventional fixed rate loan . Lenders are saying that they are going to participate but when it comes to a real act, they might not to do it. If they agreed to participate in this program, they will require an appraisal on the property and upon that appraised or current market value, they are going to take their loss. They might to get a drive by appraisal before participating on this program to find out if it is in their advantage to participate in hope loan or let it go even if ends up to a foreclosure. The lender who is going to do the new FHA refinancing is not going to be the lender who made the original sub prime loan on that home. I don't know which lender is going to order for the appraisal of the property, the lender who is going to originate the new hope loan or the lender who is going to take the loss and let the homeower get the new FHA Loan.
2-homeowners must be current in their mortgages. If they are already foreclosed, it is too late to save them.
3-they must demonstrate the lack of capacity to pay their current payment. If they are not still able to pay for the new FHA loan, they cannot be helped.
4- their mortgage payment to their income ratio must be 35% or more. For example, if their income is $4000 per month, their monthly mortgage has to be $1400 or more. If it is less than $1400, they cannot get the hope loan.
5-they have to pay upfront insurance fee of 3% of new loan amount payable out of new financing proceeds.
6- they have to certify to the government that they haven’t intentionally defaulted on their current loan or any other debt in order to refinance with hope loan, anyone who lies in the application will be subject to 5 years jail.
7-they have to agree to occupy and live in the refinanced home as a principal residence and not own any other home.
8-they have to agree to share the appreciated profit or any equity gain with HUD upon the sale of that property.
9-since the FHA loan is at 90% of the appraised value, the new refinancing creates 10% equity for the homeowner instantly at the time of refinancing but homeowners cannot tap on that equity right away. If that home was sold in the first year, that 10% equity has to be paid back to FHA in full. If the home was sold within next 5 years, 50% of equity built up or appreciation has to be paid to FHA.
10-I guess, the original loan must be originated prior to Jan. 2008
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