TITLE IV – HOPE FOR HOMEOWNERS (Division A, Title IV)
• The Plan: Under program, principal balance and interest rate for eligible borrowers is reduced through refinancing into a new, affordable FHA-insured loans based on current property values. Loans will be eligible for securitization with Ginnie Mae.
• Eligibility:Mandates mortgages eligible for refinance be originated on or before January 1, 2008. Borrowers must have debt-to-income ratios greater than 31 percent (or a higher ratio set by the Board) as of March 1, 2008. Borrower's income must be fully documented through two most recent tax returns and meet other standards established by the program's governing Board or HUD.
• New Loan Requirements: Requires 30-year fixed rate loan not exceeding 90 percent of the property's current value. Principal amount cannot exceed 132 percent of the 2007 Freddie Mac loan limits, or $550,440. Board establishes reasonable limitation on origination fees. Prohibits junior liens for five years.
• Write-Down: Requires participating noteholders agree to a reduction in principal to achieve the 90 percent loan-to-value requirement. Also, requires waiver of prepayment penalties and fees related to default or delinquency.
• Premiums: Requires noteholder to pay the three percent upfront premium from the proceeds of the refinance. Borrower pays 1.5 percent premium annually.
• Shared Appreciation: Requires borrower to share future equity with FHA when the property is sold or the loan is refinanced. Homeowner's share of newly created equity will be phased-in over five years. After five years, homeowner and government each will share in 50 percent of the equity. Program's governing Board establishes standards for sharing future appreciation owed to HUD with subordinate lienholders.
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