HOPE for Homeowners

1
HOPE for Homeowners (H4H)
Loan Closing and Insurance Endorsement
2
H4H Closing Requirements

• All existing lien holders must extinguish
  (release) their liens
• Prepayment penalties and late fees must be waived
• Senior lien holders must accept the new H4H loan
  as payment in full
• Junior lien holders may share in future
  appreciation
• New subordinate financing is prohibited in the
  first 5 years
• Exception to bring property condition up to FHA
  standards

3
H4H Closing Requirements (Contd)

• The following must be recorded
• Applicable riders such as condo, co-op, and PUD
• Shared Equity Note and Mortgage (SEM)
• Shared Appreciation Note and Mortgage (SAM)
• Borrowers 1st mortgage payment cannot be
  escrowed
• Register the H4H security instruments in the
  Mortgage Electronic Registration System (MERS)

4
H4H Shared Equity Mortgage

• Equity value at origination less the original
  principal balance on the H4H mortgage
• Originating lender prepares SEM
• (Exhibit D in Mortgagee Letter 2008-29)
• SEM executed by borrower and recorded in second
  lien position

5
H4H Shared Appreciation Mortgage

• Appreciation gross proceeds from sale less
  appraised value at origination
• May subtract allowable closing costs connected
  with sale and a percentage of capital
  improvements
• Originating lender prepares SAM
• (Exhibit E in Mortgagee Letter 2008-29)
• SAM executed by borrower and recorded in third
  position

6
Appreciation Share Calculation
7
Appreciation Share Percentages
8
H4H Equity and Appreciation Sharing

• Post Closing Document Delivery
• Within 15 days of endorsement send
• Original recorded SEM/SAM documents
• Copy of HUD-1 Settlement Statement
• Copy of H4H Appraisal
• c/o CL Service Corporation/Morris-Griffin
  Corporation
• 2488 East 81st Street
• Suite 700
• Tulsa OK 74137

9
H4H Endorsement Requirements

• Additional Documentation for Right Side
• of Case Binder
• Prior Mortgage Origination Date
• Payment History
• Prior Total Mortgage Payment
• Primary Residence
• Consumer Disclosure and Certifications
• Conviction of Fraud
• Tax Returns
• Trial Modification (if applicable)
• First Payment
• Lender Certifications

10
H4H Endorsement Requirements

• H4H loans are eligible for Direct Endorsement and
  Lender Insurance
• Lenders must request insurance/insure within 120
  days of closing with evidence the mortgage is
  current
• The case binder must include evidence the first
  mortgage payment was made by the borrower

11
H4H First Payment Default

• By statute, FHA is prohibited from paying
  insurance benefits to any lender on any H4H loan
  where the borrower fails to make the 1st payment
• Lenders and interested third parties are
  prohibited from making any payment on behalf of
  the borrower, including escrowing any payment or
  applying any payment from closing proceeds

12
H4H PETRs

• 100 percent of H4H loans will undergo a Post
  Endorsement Technical Review
• Focus will be on compliance with H4H statute and
  documentation requirements
• Cases will be rated Conforming, Deficient, or
  Unacceptable
• Failure to respond satisfactorily to a Deficiency
  Letter may require the lender to indemnify HUD
  against loss