HUD recently published Mortgage Letter 2009-43, which provides a comprehensive guidance on the key changes in the HOPE for Homeowners (H4H) Program as outlined in the Helping Families Save Their Homes Act of 2009. Key changes to the H4H Program include:
- Borrowers are ineligible if their net worth exceeds $1,000,000;
- Borrowers must not have defaulted on any substantial debt in the last 5 years;
- The age of appraisal now follows standard FHA guidance;
- Reduced mortgage insurance premiums;
- Revised loan-to-value and debt-to-income ratios;
- Maximum loan-to-value excludes the Upfront Mortgage Insurance Premium;
- Eliminated requirement for obtaining most recent two year tax returns;
- Eliminated special lender and underwriter certification;
- Exit Premium replaces Shared Equity;
- Shared Appreciation feature eliminated;
- New note and mortgage replaces previous shared equity and shared appreciation notes and mortgages; and
- Lenders must submit 5 test cases for pre-closing review by FHA
The Mortgagee Letter is also accompanied by four Attachments: Exhibit A - HOPE for Homeowners Consumer Disclosure and Certification Form; Exhibit B - Lender Insurance Program Model Pre-Insurance Review; Exhibit C - Exit Premium Note and Exit Premium Mortgage; and Exhibit D - H4H Subordinate Lien Upfront Payment Worksheet. The Mortgagee Letter supersedes in their entirety Mortgagee Letters 2008-29, 2008-30 and 2009-03 and is effective for endorsements on or after January 1, 2010.
