An Introduction to: FHA and HOPE for Homeowners

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An Introduction toFHA and HOPE for Homeowners

• Suzanne Garwood
• Venable LLP
• 202-344-8046
• sfgarwood_at_venable.com

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FHA and HOPE for Homeowners

• FHA
• Background and History
• Loan Types
• Current Developments
• HOPE for Homeowners
• Purpose
• Utility
• Current Developments

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FHA

• BACKGROUND
• and
• HISTORY

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FHA Background and History

• WHAT IS FHA?
• The Federal Housing Administration FHA
  provides
• mortgage insurance on loans made by
  FHA-approved
• lenders
• WHAT IS FHA INSURANCE?
• If a borrower defaults, then the lender is
  protected against
• losses where FHA will pay a claim to the lender
• HOW IS FHA FUNDED?
• FHA is self-funding through its insurance
  premiums.

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FHA HISTORY

• 1934 - Congress Creates the FHA
• 1940 - FHA Helps WWII Veterans Finance Homes
• 1965 - FHA Becomes Part of the
• Department of Housing and Urban
  Development
• 2001 - Homeownership Rate Tops All-Time High
• 68.1

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FHA LOAN TYPES

• Section 203(b)
• HECMs
• Section 203(k)
• Community Programs

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FHA LOAN TYPE

• SECTION 203(B)
• Borrower must meet standard FHA
• credit qualifications
• Eligible for 96.5 financing
• Borrower is able to finance the
• upfront mortgage insurance premium
• Eligible property is one-to-four family
• structure

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FHA LOAN TYPE

• HECMs/Reverse Mortgage Loans
• A reverse mortgage loan allows seniors to
  withdraw
• equity in a fixed monthly amount or a line of
  credit or a
• combination of both
• HECMs also can be purchase money loans
• Borrowers must be
• 62 years old
• Own the property outright
• Occupy the property as a principal residence
• Not be delinquent on any federal debt
• Participate in a counseling session

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FHA LOAN TYPES
Section 203(k) Permits homebuyers to finance an
additional 35,000 into their mortgage to improve
and upgrade their homes. This is HUDs primary
program for the rehabilitation and repair of
single family properties.
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FHA LOAN TYPES

• Community Programs
• Officer Next Door Program
• Teacher Next Door Program
• Firefighter/Emergency Medical Technician
• Next Door Program

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FHA LENDERS

• Lenders obtain FHA approval to originate loans
• Lenders can get Direct Endorsement Approval
• for underwriters
• Lenders can contract out origination functions
  that
• do not materially affect underwriting
  decisions
• Clerical assistance
• Preparation of loan documents
• Mailing out and collecting verification forms
• Ordering credit reports
• Preparing for credit endorsements
• Shipping loans to investors

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FHA LOSS MITIGATION

• FHA LOSS MITIGATION
• Assumptions
• Claims
• Deed-In-Lieu
• Extension of Time
• Foreclosure
• Loan Modification
• Partial Claims

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FHA LOSS MITIGATION

• Making the FHA Lender Whole
• Bankruptcy
• Making Home Affordable
• S. 896

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HOPE For Homeowners
HOPE FOR HOMEOWNERS
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HOPE for Homeowners

• Authorized by the Housing and Economic Recovery
  Act
• Effective October 1, 2008 - September 30, 2011
• Mortgagee Letter 2008-29 - Origination Guidance
• Mortgagee Letter 2008-30 - Servicing and Loss
  Mitigation
• Guidance
• Modified by the Emergency Economic Stabilization
  Act
• Allows lenders to pay off subordinate-lien loans
• Mortgage Letter 2009-03

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HOPE for Homeowners

• Making Home Affordable Program
• Servicers required to determine ability for
• HOPE for Homeowners Program
• Pay-for-Success payments
• MakingHomeAffordable.gov