The new $300 billion Hope for Homeownership program will more than likely be a template for subsequent programs.
It states these criteria for eligibility:
– have taken out their mortgages on or before Jan. 1, 2008 and have made at least six payments.
– be unable to afford their current loan, but did not intentionally miss payments.
– have a debt-to-income ratio of at least 31%.
– live in the house and not own other homes.
– have provided accurate information on their loan documents and not been convicted of fraud in the past decade.
Under the program, borrowers will get:
– a 30-year, fixed rate mortgage of up to $550,440.
– a new appraisal and loan for no more than 90% of the home’s value.
– released from second mortgages and prepayment penalties.
– But homeowners must pay a premium of 3% of the loan’s value upfront, and 1.5% of the outstanding mortgage amount annually. Also, they must share any appreciation in the home’s value with the FHA when they sell.
I can’t see how this convinces SoCal owners to use the program(s), considering how upside down most are. I would personally rather walk away than pay 10% down (based on the new loan only being 90% of appraised value), 3% premium, a 1.5% annual fee plus appreciation sharing w/ FHA.
I would much rather walk away, take the credit hit, save money while renting, let values decline more, then try again in five years.
