New HUD Program from bailout bill

[Account Closed]

New program is effective today. Here are the details:

http://www.hud.gov/hopeforhomeowners/index.cfm

Borrowers may be eligible if (among other factors):

The home to be refinanced is a 1-unit primary residence, and the borrower has no ownership interest in any other residential real estate.

The existing mortgage was originated on or before January 1, 2008, and the borrower has made at least 6 payments on it.

Their monthly mortgage payments exceed 31% of their gross income as of March 31, 2008.

They are unable to pay his/her existing mortgage(s) without help.

They must certify that they have not been convicted of fraud in the past 10 years or intentionally defaulted on their debts, and that they did not willingly provide material false information to obtain their existing mortgage(s)

The process is similar to the current FHA application process with the following additions:

The loan amount may not exceed a nationwide maximum of $550,440.

The new mortgage will be no more than 90% of the new appraised value including any financed UFMIP with the lender essentially writing down the current mortgage to that amount.

Upfront MIP is 3% and the monthly MIP is 1.5%

The holders of existing mortgage liens must waive all prepayment penalties and late payment fees.

The existing first mortgage must accept the proceeds of the H4H loan as full settlement of all outstanding indebtedness.

Existing subordinate lenders must release their outstanding mortgage liens.

Standard FHA policy regarding closing costs applies, and they may be 1) financed into the new loan provided the LTV does not exceed 90% including UFMIP, 2) paid from the borrowers own assets, 3) paid by the servicing lender or third party (e.g., Federal, state, or local program), or 4) may be paid by the originating lender through premium pricing.

The borrower must agree to share both the equity created at the beginning of this new mortgage and a portion of any future appreciation in the value of the home.

The borrower cannot take out a second mortgage for the first five years of the loan, except under certain circumstances for emergency repairs.