U.S. Housing and Urban Development (HUD) Secretary Steve Preston on November 19 announced that the Board of Directors of the HOPE for Homeowners program has approved changes to enable more distressed borrowers to refinance into affordable, government-backed mortgages. The changes will reduce the program costs for consumers and lenders alike, and will expand eligibility by driving down the borrower's monthly mortgage payments, HUD claimed.

“The Hope for Homeowners program has seen very low participation,” Preston acknowledged at a press conference. “Because of strict guidelines and a number of unique and specialized requirements in the original law, few lenders have actually signed up, and few borrowers have submitted applications. Clearly, meaningful changes were needed.” Reportedly, the program has received fewer than 100 applications since its October 1 opening day, and none of these applications has been approved.

Preston assured his audience that the changes he was announcing would make a difference. “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,” he declared.

According to HUD, the modifications to HOPE for Homeowners include:

• Increasing the loan to value ratio (LTV) to 96.5 percent for some loans,
• Permitting upfront payments to the holders of subordinate liens, 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.”