Mortgage Relief – Hope For Homeowners
In July of 2008, Congress passed the Hope for Homeowners Act as a way to provide mortgage relief. The Act is designed to help more than 400,000 homeowners avoid foreclosure, and will run from October 1, 2008 to September 2011.
What does the Hope for Homeowners Act do?
The Act allows qualified homeowners to refinance their mortgages under 30-year fixed-rate loans. This covers up to 90% of the home’s current value, and the Federal Housing Administration (FHA) will insure more than $300 billion in loans over this three-year period.
Are you eligible?
There are four factors to being eligible for mortgage relief under the Act:
1. You have to have spent at the minimum 31% of your monthly income on the loan as of March 1, 2008.
2. The home has to be your dominant residence
3. Your income needs to be verifiable
4. The loan must have started between January 1, 2002 and December 31, 2007.
Will you be chosen for mortgage relief under the Hope for Homeowners Act?
Being eligible doesn’t necessarily average that you’ll be chosen for mortgage relief under the Act. Lenders can select which loans to refinance, and to allow this kind of mortgage relief the lender would have to be willing to take a loss on the existing loans.
Find out if your lender is considering taking the government’s offer. It may be weeks before they decide and, if they’re in favor of the Act, already longer before they start assessing individual loans.
Reselling Your Home
If your lender allows Hope for Homeowners mortgage relief, but you want to sell your home during the next five years:
The government receives half the profit.
Equity gains would be based on a sliding extent:
Zero equity in the first year
10% rise in equity each succeeding year
Equity caps at 50% after the fourth year.
Equity most be repaid
The maximum amount of the refinanced loan caps at 90% of the current market value. Because of this, the homeowner automatically receives 10% equity in the home.
Mortgage relief is possible, and foreclosure isn’t a foregone conclusion. Stay informed!