Government offers Hope for Homeowners

The federal government has introduced a new mortgage program for homeowners who are having difficulty making their mortgage payments. The program, called “Hope for Homeowners,” is another option for struggling homeowners who want to refinance their mortgage into a fixed-rate loan that they can afford.

The Hope for Homeowners program might be a good choice for you if:

● Your home is your primary and only residence.
● You don't own any other residential property.
● You obtained your mortgage on or before Jan. 1, 2008.
● You've made at least six payments on your mortgage.
● You're financially unable to make any future mortgage payments without help.
● As of March 2008, your monthly mortgage payment (including principal, interest, property taxes and homeowner's insurance) was more than 31 percent of your monthly income.

If you qualified for the Hope for Homeowners program, your original mortgage would be refinanced into a new 30-year fixed-rate mortgage with an interest rate that would be negotiated between you and your new lender. The maximum amount of your new loan would be $550,440.

A key advantage of the Hope for Homeowners program is that your current lender must waive any prepayment penalties and late payment fees that you owe and forgive a portion of your existing mortgage.

For example, suppose your home were worth $100,000, but you owed $120,000 on your mortgage. Through the Hope for Homeowners program, you could get a new mortgage for $90,000, mortgage payments that you could afford and 10 percent equity in your property. Your current lender would write off the additional $30,000 that you owed.

There are a few tradeoffs: Your new loan would require mortgage insurance. You would have to share your initial equity and any future appreciation in your home's value with the government, which might give part of that amount back to your original lender to make up for the loss on your loan. And you wouldn't be allowed to take out a second mortgage for at least five years, except for necessary repairs to your home.

To get started, you can call your lender or loan servicer, contact a new lender of your choice that's approved by the Federal Housing Administration (FHA) or ask a housing counselor to help you work through the process. You can find a list of FHA-approved lenders at, and you can find out more about the Hope for Homeowners program at


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