By Jan Lindsey
The Hope for Homeowners program has been a disappointment, federal officials say.
Begun last year under the Bush administration and continuing now, the plan is intended to help financially stressed homeowners stay in their homes by refinancing into FHA-insured loans. The latest figures show the program has processed only 947 applications and rewritten 67 loans, according to Lemar C. Wooley, a spokesman with the U.S. Department of Housing and Urban Development.
So perhaps it is no surprise that William Apgar, Senior Advisor for Mortgage Finance to HUD Secretary Shaun Donovan, on July 16 told the U.S. Senate Committee on Banking, Housing and Urban Affairs that change is in the works.
On July 24, Wooley said: “…The program will be relaunched in the next few weeks.”
Hope for Homeowners helps borrowers gain equity in their homes now in exchange for giving up some equity later.
“Unfortunately, due to several obstacles to participation, including steep borrower fees and costs, complex program requirements, and lack of operational flexibility in program design, the original (Hope for Homeowners) program has only served a handful of distressed homeowners,” a transcript shows Apgar told the committee.
So what is being done?
For one thing, Apgar said, a Hope for Homeowners solution will be offered as another option to those who apply to modify their loans under the Making Home Affordable program. “Pay-for-success” payments will begin going to servicers and lenders who refinance loans under Hope for Homeowners, just as they go to those who modify loans under Make Home Affordable.
That change should be visible to homeowners, who should gain better access to the program. Other alterations will be less obvious because they will affect the back-end workings of the program.
There, the feds are looking for ways facilitate the handling of second mortgages. Hope for Homeowners strives to modify both first and second liens on the home and it can be a difficult to accomplish the complex communication and decision making required of the two lenders, Apgar said.
It can also be challenging to set down a fair payment allocation for each lender, he said. And second lenders are sometimes reluctant to participate.
“The goal is a program that works – a program that provides real benefits to a group of homeowners best served by an increased equity position in their homes, while at the same time providing fair treatment to the interests of the investor/owner of first and second liens and adequate compensation for the other parties participating in the transaction,” Apgar said.