Hello everyone. If your one of the 1000’s who have visited this website or called me on the H4H loan program, then you know how horrible the Banking industry has been in general with this loan program. I have only heard that Flagstar Bank here in Michigan, was going to do the loan for “A Select Few” as a “Last resort”…I guess its a start. But beyond them I don’t know of a single bank in this COUNTRY that is telling you that they’ll refinance you into this loan program. To make matters worse, we as Mortgage Brokers, (We originate 50% or more of the loan applications in this country) do not have a single bank who is willing to Purchase the Hope for Homeowners Loan FROM US!!, Therefore we can’t Originate a SINGLE mortgage for this loan program that would help so many people.

Well, today the Bush Administration and HUD announce some new “Flexibility” in the Program (see below) it all sounds good, but let me ask you this Mr. President and HUD officials, WHO CARES about your flexibility if NO BANKS are going to offer the products to their clientle and us Mortgage Brokers have no bank to sell the loan to!!

As the saying goes, “You can put lipstick on a Pig, but it’s still a PIG”….Unless there are some massive changes in the Banks attitudes toward lending then this “New Flexibility” is a complete waste of time and yet another slap in the face to the people who need the help, see the loan, and are told NO CAN DO by me and hundreds of other Brokers around the country.

Jeff Marsack, Great Lakes Mortgage Funding “Your Mortgage Advocate”

FOR RELEASE
Wednesday
November 19, 2008

BUSH ADMINISTRATION ANNOUNCES FLEXIBILITY
FOR “HOPE FOR HOMEOWNERS” PROGRAM
Changes will allow more struggling families to use the program and keep their homes
WASHINGTON – U.S. Housing and Urban Development Secretary Steve Preston today announced that the HOPE for Homeowners (H4H) Board of Directors has approved changes to the program to help more distressed borrowers refinance into affordable, government-back mortgages. The changes will reduce the program costs for consumers and lenders alike while also expanding eligibility by driving down the borrower’s monthly mortgage payments.

“Clearly, meaningful changes were needed. These modifications should increase lender participation and help more families who are having difficulty paying their existing mortgages, but can afford a new affordable loan insured by HUD’s Federal Housing Administration,” said Preston.

By taking full advantage of the new authority provided under the Emergency Economic Stabilization Act (EESA) of 2008, HOPE for Homeowners will provide additional mortgage assistance to struggling homeowners.

Modifications to HOPE for Homeowners include:
· Increasing the loan to value ratio (LTV) to 96.5 percent for some H4H loans;
· Simplifying the process to remove subordinate liens by permitting upfront payments to lienholders; and
· Allowing lenders to extend mortgage terms from 30 to 40 years.

“These changes will further encourage lenders to take a hard look at this program before heading down the path to foreclosure and will provide families with another resource to refinance into a loan they can afford,” said FHA Commissioner Brian D. Montgomery. “HOPE for Homeowners will continue to serve as another loss mitigation tool that can be used to help families keep their homes.”

HOPE for Homeowners will continue to only offer affordable, government-insured fixed rate mortgages. Further, this program will maintain FHA’s long-standing requirement that new loans be based on a family’s long-term ability to repay the mortgage. Only owner-occupants are eligible for FHA-insured mortgages.
BACKGROUND

Increasing the Loan-to-Value and Adjusting Debt-to-Income Ratios

The program will increase the loan-to-value ratio (LTV) on H4H loans to 96.5 percent for borrowers whose mortgage payments represent no more than 31 percent of their monthly gross income and household debt no more than 43 percent. This change will expand the number of eligible borrowers. Raising the loan-to-value ratio reduces the gap between the existing loan balances and the new H4H loan and decrease losses to the existing primary lienholders. Alternatively, the program will continue to offer borrowers with higher debt loads a 90 percent loan-to-value ratio on their H4H loans. This LTV ratio will include borrowers with debt-to-income ratios as high as 38 and 50 percent. In conjunction with the LTV change, H4H will eliminate the trial modification that was previously required. This measure was too complicated and required delicate negotiations among the existing lienholders, the new H4H lender, and the borrower.

Immediate Payments to Subordinate Lienholders

H4H will offer subordinate lienholders an immediate payment in exchange for releasing their liens, to permit more borrowers access to the program. Previously, subordinate lienholders who released their liens were only eligible to receive a small recovery payment when the home owned by the H4H borrower was sold. Given the amount of time that would pass between the creation of the H4H and the ultimate sale of the home, as well as the tremendous market uncertainties, subordinate lienholders were not guaranteed any return at all. To address this problem, the subordinate lienholders may now receive an immediate payment at the time the H4H loan is originated.

Extending Loan Terms from 30 to 40 years

To assure that borrowers are put into the most affordable monthly payment possible, HOPE for Homeowners will permit lenders to extend the mortgage term from 30 to 40 years. For borrowers with very high mortgage and household debt loads, extending out the amortization period may reduce their monthly payments enough to make it possible for them to qualify for this rescue product and save their homes.

Consistent with statutory and regulatory requirements, borrowers must continue to meet the following criteria:

· Their mortgage must have originated on or before January 1, 2008.

· They cannot afford their current loan.

· They must have made a minimum of six full payments on their existing first mortgage and did not intentionally miss mortgage payments.

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

· The Upfront Mortgage Insurance Premium is 3 percent and the Annual Mortgage Insurance Premium is 1.5 percent.

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

· They do not own a second home.

· They did not knowingly or willfully provide false information to obtain the existing mortgage, and they have not been convicted of fraud in the last 10 years.

· They must follow FHA’s long-standing and strict policy of fully documented income and employment.

The HOPE for Homeowners program was authorized by the Housing and Economic Recovery Act of 2008. A Board of Directors was charged with establishing underwriting standards to ensure borrowers, after any write-down in principal, have a reasonable ability to repay their new FHA-insured mortgage. The program began October 1, 2008, and will end September 30, 2011.

The HOPE for Homeowners Board of Directors includes HUD Secretary Steve Preston, Treasury Secretary Henry Paulson, Federal Reserve Board Chairman Ben Bernanke, and FDIC Chairman Sheila Bair. They have named the following people to serve on the board as their designees: FHA Commissioner and Chairman of the Board Brian Montgomery, Federal Reserve Board Governor Elizabeth Duke, Treasury Assistant Secretary for Economic Policy Phillip Swagel, and Federal Deposit Insurance Corporation Director Tom Curry.

FDIC head wants more rescue funds to help block mortgage foreclosures

By Greg Robb & Ronald D. Orol, MarketWatch

WASHINGTON (MarketWatch) - A simmering closed-door debate between top government officials over the priorities of the government’s financial market rescue package spilled out into public on Tuesday.

Treasury Secretary Henry Paulson and Federal Deposit Insurance Corp. Chairwoman Sheila Bair clashed in public over whether to use some of the $700 billion package to aid homeowners at risk of foreclosure. Bair on Friday unveiled a $24.4 billion proposal aimed at modifying 1.5 billion mortgages to avoid foreclosures, however Paulson said he would not pay for it as part of the $700 billion bank Troubled Asset Relief Plan plan.

“The root cause of the current economic crisis [is] the failure to deal effectively with unaffordable loans and unnecessary foreclosures,” Bair said to lawmakers at a House Financial Services Committee TARP oversight hearing.

‘The root cause of the current economic crisis [is] the failure to deal effectively with unaffordable loans and unnecessary foreclosures.’

— Sheila Bair, FDIC chairwoman

She noted that the rescue package approved by Congress “specifically provides” Paulson with the power to use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures.

Instead, Paulson said he is sticking with his plan to use the first half of the allocated government capital, $350 billion, to buy significant minority stakes in large, mid-sized and small financial institutions. This approach is starkly different from Paulson’s initial strategy in September to use the capital to buy illiquid mortgage backed securities. Paulson said he changed the approach as market realities changed with it.

“Although we are not planning to initiate another capital program beyond those already announced, an emphasis on capital seems to us to be the better strategy going forward,” Paulson told lawmakers. “Congress passed legislation to deal with financial instability, and that is what we are doing.”

He said the best way to turn around the weak housing market was to “increase access to lower cost mortgage lending.”

He argued that the government takeover of Fannie Mae   
was an important step in that direction.

Paulson said Thursday he plans to let the Obama administration decide how to allocate the second half of the government purchase plan capital.

House Financial Services Committee chairman Barney Frank said he was supportive of Bair’s approach and he wanted to see some capital from the bank bailout fund used to help mortgage owners avoid foreclosure. “Some of this tarp money has to be used for mortgage foreclosure prevention,” Frank said

House Financial Services Committee ranking member Spencer Bachus, R-Ala. indicated he was less frustrated with Paulson’s capital injection approach. But he also raised concerns about how the bank bailout hasn’t seemed to help borrowers. “We need to strengthen economy to restore lending and borrowers, that hasn’t worked well,” Bachus said.

Overall, Paulson and Federal Reserve Chairman Ben Bernanke defended on Tuesday their stewardship of the $700 billion financial market rescue plan. “A lot of it still hasn’t gone out to the banks. I think we’ve turned the corner in terms of stabilizing the markets and banks, but we will see restoration to lending” Paulson said.

Paulson said that there was “no playbook” for the Bush administration to follow and so strategy had to be adjusted. He said the financial markets would be worse off if Congress had not approved the package.

Bernanke said he saw some improvements in credit markets, but said overall conditions remain “far from normal.”

Bair has already schedule to adopt a Temporary Liquidity Guarantee Program rule on Friday that would seek to unlock inter-bank credit markets and “restore rationality to the credit markets.”

Bair’s proposal would guarantee new, unsecured debt issued by banks, thrifts and bank holding companies issued between Oct. 14 and June 30. According to her proposal, debt issued cannot exceed 125% of senior unsecured debt that was outstanding as of Sept. 30 and scheduled to mature before June 30. The program provides insurance coverage for deposits typically used by corporations for payroll expenses.

In addition to Frank, other Democratic lawmakers have expressed support for Bair’s mortgage foreclosure prevention approach. “Everybody agreed at that time that sub-prime meltdown was at the epicenter of this situation,” said Rep. Maxine Waters, D-Calif.