# Presentation: 725238

## HOPE for Homeowners

**HOPE for Homeowners**
**(H4H)**

**Program Overview**

## Features

Equity and appreciation sharing

How H4H works

Benefits and costs

H4H vs. FHA Secure 

- Equity and appreciation sharing
- How H4H works
- Benefits and costs
- H4H vs. FHA Secure

**Overview**

## 30-year fixed rate mortgage
Max 90% LTV of new appraised value
All existing liens extinguishes
Loan limit of $550,440 nationwide
3.0% UFMIP and 1.5% annual MIP
1 unit properties only
Available 10/1/08 through 9/30/11 

- Max 90% LTV of new appraised value
- All existing liens extinguishes
- Loan limit of $550,440 nationwide
- 3.0% UFMIP and 1.5% annual MIP
- 1 unit properties only
- Available 10/1/08 through 9/30/11

**H4H Features**

## 
Affordability problem
Owner occupant/principal residence
No intentional defaults on previous loan
No materially false information to obtain previous mortgage
Not convicted of fraud in last 10 years

- Affordability problem
- Owner occupant/principal residence
- No intentional defaults on previous loan
- No materially false information to obtain previous mortgage
- Not convicted of fraud in last 10 years

**H4H Borrower Eligibility**

## Existing mortgage payment DTI >31

Originated on/before January 1, 2008

Prime, Alt-A, Subprime, FHA, RD, VA

Fixed-rate or ARM

Current, delinquent, foreclosure, bankruptcy

- Originated on/before January 1, 2008
- Prime, Alt-A, Subprime, FHA, RD, VA
- Fixed-rate or ARM
- Current, delinquent, foreclosure, bankruptcy

**Previous Mortgage ****–**** Eligibility**

## Principal and only residence; cannot own other residential real estate

1 unit properties only

All property types—condos, MH, co-ops

Appraisal no more than 3 months old at closing

- 1 unit properties only
- All property types—condos, MH, co-ops
- Appraisal no more than 3 months old at closing

**Qualifying Property**

## Must have made 6 months mortgage payments ever, over life of loan

H4H Ratios = 31/43 
Can be exceeded to 38/50 with successful        3-month trial modification
On-time and in-full payments

MIP and transaction costs included in 90% (lender/borrower/3rd parties may pay)

- H4H Ratios = 31/43
- Can be exceeded to 38/50 with successful        3-month trial modification
- On-time and in-full payments
- MIP and transaction costs included in 90% (lender/borrower/3rd parties may pay)

**Qualifying Under H4H **

## Borrower and FHA share equity created by write down

Sliding scale with 100% going to FHA in first year with 50/50 split after 5 years

Borrower can extinguish equity note through refinance

- Sliding scale with 100% going to FHA in first year with 50/50 split after 5 years
- Borrower can extinguish equity note through refinance

**Equity Sharing**

## 
Borrower and FHA share in future appreciation

FHA can share its future appreciation entitlement with subordinate lien holders

Borrower can extinguish the appreciation note through sale only

- Borrower and FHA share in future appreciation
- FHA can share its future appreciation entitlement with subordinate lien holders
- Borrower can extinguish the appreciation note through sale only

**Appreciation Sharing**

## 
Servicers => Borrowers
Easiest
Most likely to be successful
Borrowers => Servicers
Counselors => Borrowers => Servicers
Originators => Borrowers
Most difficult
Least likely to be successful

- Servicers => Borrowers
- Easiest
- Most likely to be successful
- Borrowers => Servicers
- Counselors => Borrowers => Servicers
- Originators => Borrowers
- Most difficult
- Least likely to be successful

**How Program Works**

## Costs vs. Benefits

A)  Losses compared to
Foreclosure
Loan modification
FHA Secure
Transaction Costs/Unique Procedures
Specialized certifications/disclosures
Waiver of prepayment penalties/default fees
Trial modifications
Borrower Eligibility

- A)  Losses compared to
- Foreclosure
- Loan modification
- FHA Secure
- Transaction Costs/Unique Procedures
- Specialized certifications/disclosures
- Waiver of prepayment penalties/default fees
- Trial modifications
- Borrower Eligibility

**Lender Considerations**

## Costs vs. Benefits

A) Potential for reduced losses 

Liquidity

Recoveries 
Subordinate lien holders entitled to portion of shared appreciation
Primary lien holder may “purchase” shared appreciation rights from subordinate

- A) Potential for reduced losses
- Liquidity
- Recoveries
- Subordinate lien holders entitled to portion of shared appreciation
- Primary lien holder may “purchase” shared appreciation rights from subordinate

**Lender Considerations**

## Existing Loan Balance(s) = $150,000
Primary Lien = $130,000
Subordinate Lien = $20,000
Current Appraised Value = $120,000
H4H Loan Amount = $108,000
Loss = $42,000

Transaction Costs:
3.0 UFMIP = $3,240
Other Fees (2% – could be higher) = $2,160

Total Losses = $47,400

- Primary Lien = $130,000
- Subordinate Lien = $20,000
- Current Appraised Value = $120,000
- H4H Loan Amount = $108,000
- Loss = $42,000
- Transaction Costs:
- 3.0 UFMIP = $3,240
- Other Fees (2% – could be higher) = $2,160
- Total Losses = $47,400

**Example**

##  Benefits 
Value realignment/reduced principal
New equity 
Affordable payments
Costs
Higher premiums/interest rate
Shared equity with FHA
Share future appreciation with FHA

- Value realignment/reduced principal
- New equity
- Affordable payments
- Costs
- Higher premiums/interest rate
- Shared equity with FHA
- Share future appreciation with FHA

**Borrower Considerations**

## H4H vs. FHA Secure

| Criteria | HOPE for Homeowners | FHA Secure |
| --- | --- | --- |
| Eligible Loan Types for Refi of 
Delinquent | Fixed-rate or ARM
Conventional or gov’t 
Loans originated on or before Jan. 1, 2008
6 months payments on loan ever, over life of loan | ARMs
Conventional loans 
No limit on months of            delinquency at time of refinance
Prior to episode of delinquency, only two 30-day lates (3X30, 90 LTV) |
| Loan to Value | Maximum 90% 
Cannot include prepay penalties or late fees | 97.0% (Standard FHA LTV)
May include prepay penalties and late fees |
| Property
Type | 1 unit properties only | 1-4 family properties |

## H4H vs. FHA Secure

| Criteria | HOPE for Homeowners | FHA Secure |  |
| --- | --- | --- | --- |
| Combined
Loan to value | 90%
No subordinate financing allowed | Unlimited CLTV for new subordinate financing
Unlimited CLTV for re-subordination or modification of existing subordinate financing |  |
| New Mortgage | 30-year fixed-rate | 15- or 30-year fixed-rate, 1-year ARM, or hybrid ARM |  |
| Upfront Mortgage Insurance | 3.0% (included in 90% max LTV) | Delinquent:
3% UFMIP | Current:
1.75% UFMIP |
| Annual Premium | 1.5% | >95% LTV is .55%
<95% LTV is .50% |  |
| Sharing | Equity and Appreciation | None |  |