Northern Virginia Residential Blog-Samson Realty

What is Hope for Homeowners plan?

The federal government plan "Hope for Homeowners plan" started Oct. 1st. Its a great new intiative for many home owners who cannot afford their mortgage payments and refiance due to the decrease in their home value. Without help, these people will end up in foreclosure. Hope for Homeowners encourages lenders to forgive some of the debt of these troubled homeowners so they can refinance into mortgages insured by the Federal Housing Administration, or FHA.

Criteria for eligibility for Hope for Homeowners
 
*The house has to be the borrower's primary residence.
*It can't be a second home or investment property. 
*The mortgage must have been originated before Jan. 2, 2008.
*The borrower must have made at least six payments. 
*Payments are unaffordable without help.
*House payments are more than 31 percent of before-tax income.
*The borrower didn't lie on the loan application, hasn't intentionally defaulted on debts and hasn't been convicted of fraud in the last 10 years.

How forgiveness would work

If a lender can be persuaded to participate in Hope for Homeowners, here's how it would work: The lender would forgive all the debt over 90 percent of the home's currently appraised value, and allow the homeowner to refinance with an FHA-insured mortgage.

For example, let's say someone owes $125,000 on a house that has lost value and is now worth $100,000. The owner can't afford the higher payments because of a rate adjustment. The lender would forgive $35,000 of the debt, allowing the owner to refinance with another lender for $90,000. That loan would be insured by the FHA, and would have an upfront FHA insurance premium of about $2,700. In most cases, that $2,700 would come out of the hide of the old lender, on top of the $35,000 in debt forgiveness. Faced with these figures, some lenders might figure that it might be cheaper to foreclose.

Borrowers who take advantage of Hope for Homeowners will have to share their house price appreciation with the government when they refinance the loan or sell the house. Depending on how long they have the loan, they will have to give the government as little as half and as much as all of the gain in the home's value. For example, if the house is appraised for $100,000 when the house is refinanced in 2008, and then the house is sold for $120,000 in 2014, the owner will have to give the government $10,000 -- half of the appreciation.

So how I can start:

I know lot of people are ready to jump start and take advantage for this program. Best place would be to call your lender or counseling agencies. Before you make the call read the eligiblity and you should have following items at your fingertips:

*The date when the loan was originated.
*Know whether there's a home equity loan or line of credit, and the outstanding balance. 
*At least one paycheck stub for each earner in the household, to determine gross income. 
* A bank statement and copies of all the monthly bills, to determine expenses. This includes credit card, auto and student loan debts, utilities, groceries, and things that are usually paid for in cash, such as lunches. •
*The most recent tax return.

Bank of America is putting togather a similar program for its clients which will be effective Dec. 1st.

If you are still want to unload that home and the mortgage call me today to put togather a short sale package and avoid foreclosure. Buyers looking for great deal foreclosure homes call me today at 703-625-4949 or email me at Info@eNOVAHomes.com to get the active list of homes in the area.