HOPE

A recent article in the Mercury News lays out the future for the HOPE program, and what struggling mortgage borrowers can expect from this $300 billion dollar initiative.  For the full article, click the link--

Kenneth Harney: There's 'HOPE' around corner for struggling mortgage borrowers

The basic goal behind the HOPE program is to save people at immediate risk of losing their houses who could afford to keep their property and avoid foreclosure if offered a reduction in mortgage balances and interest rates. 

The program as outlined is completely voluntary, and that may be one of its biggest flaws. It's supposed to provide refinancing to as many as 400,000 homeowners drowning in their current loans, but it will ultimately be up to the lenders and investors who own those loans to decide if they'll allow their borrowers to refinance. So even if the borrower desperately wants or needs to take advantage of the HOPE program their lender might stop them, fearing they'll lose less by letting borrowers slide into foreclosure. 

This puts a massive roadblock in place that may severely limit the HOPE program's ability to actually help homeowners. There are other hurdles to consider as well. Here they are, straight from the article. 

Borrowers must--

"Demonstrate a "lack of capacity" to pay their current mortgage but have enough income to make regular monthly payments on a smaller, fixed-rate FHA loan. Their current income-to-mortgage debt ratio must be above 35%.

Certify to the government that they haven't "intentionally defaulted" on their current mortgage or on any other debt in order to refinance into a HOPE loan. They must also certify that they are telling the truth about their financial status, and have never been convicted of a fraud. Anyone who lies will be subject to severe penalties, including up to five years in prison.

Agree to use and occupy the refinanced house as their principle residence, and not own any additional houses."

The plan could go into effect as early as Oct 1st. Hopefully it will help shovel us out of the housing/foreclosure crisis. We'll have to wait and see how cumbersome the limitations on this program prove to be.