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The Hope for Homeowners program, also known as H4H, is an FHA program that assists struggling homeowners. Under this program, property owners who are struggling to make their monthly mortgage payment can refinance into a new FHA loan. This loan will be insured by the government and the monthly payments will be an amount the homeowner can afford.
For lenders, participation in this program is strictly voluntary. Most lenders choose to participate in this program because it can be used to mitigate the loss the lender might encounter if they foreclosed on the property and it allows a homeowner to keep their home.
The Hope for Homeowners program is only open to owner occupied properties. The homeowner must have made at least six full mortgage payments during the life of the existing mortgage. The homeowner is not allowed to have an interest in any other property including second homes or rental properties. The existing mortgage payment must exceed 31% of the homeowner’s gross monthly income. The homeowners current mortgage must have originated on or before January 1, 2008. Lastly the homeowner must not have been convicted of fraud in the past 10 years.
Equity Sharing Requirements
Any homeowner who participates in the Hope for Homeowner program is required to share any equity in the property with the Government. At time of closing an appraisal will be completed to show the value of the property. Equity is defined as the difference between this appraised value and the mortgage balance. When the hope is sold, the homeowner is required to pay the government this amount.
In addition the homeowner is required to share with the government any appreciation in the property based on a sliding scale. This percentage starts at 100% of the appreciation if the property is sold in one year and decreases to 50% if the property is sold after the fifth year.
Homeowners who meet the program requirements are required to submit documentation to support their qualification for this program. The following is a list of documentation that homeowners are required to submit:
- Payment History – Homeowners are required to have made at least six full mortgage payments during the life of the existing mortgage. They can provide evidence with cancelled checks or submit payment history from their current mortgage company.
- Mortgage Payment as a Percentage of Income – The homeowners current mortgage payment must exceed 31% of their gross monthly income. The homeowner can provide paystubs, Federal tax return or W-2s to document that their payments exceed this 31% threshold.
- Mortgage Origination Date – Only mortgages that originated on or before January 1, 2008 are eligible for the Hope for Homeowners Program. Usually a HUD-1 settlement statement will suffice.
- Primary Residence – The H4H program is only open to owner occupied properties and not investment properties. Homeowners can use a Federal tax return, driver’s license or voter’s registration card to show a property is their primary residence.
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