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[Federal Register: October 6, 2008 (Volume 73, Number 194)]
[Rules and Regulations]
[Page 58417-58426]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06oc08-13]
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Part VI
Board of Directors of the HOPE for Homeowners Program
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24 CFR Part 4001
HOPE for Homeowners Program: Program Regulations; Final Rule
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BOARD OF DIRECTORS OF THE HOPE FOR HOMEOWNERS PROGRAM
24 CFR Part 4001
[Docket No. B-2009-F-01]
RIN 2580-AA00
HOPE for Homeowners Program: Program Regulations
AGENCY: Board of Directors of the HOPE for Homeowners Program.
ACTION: Final rule.
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SUMMARY: This final rule sets forth the core requirements for the HOPE
for Homeowners Program that have been established by the Board of
Directors (Board) of the HOPE for Homeowners Program (Program). A new
section 257 of the National Housing Act (NHA) provides the authority
for this Program and oversight requirements to be performed by the
Board. Specifically, section 257(c)(1) of the NHA requires the Board to
prescribe such regulations as may be necessary or appropriate to
implement the Program. The Board has determined that the regulations
set forth in this rule are necessary and appropriate for the
implementation and effective administration of the Program.
DATES: Effective Date: October 6, 2008.
FOR FURTHER INFORMATION CONTACT: Emmanuel Yeow, Secretary of the Board
of Directors of the HOPE for Homeowners Program, Department of Housing
and Urban Development, 451 7th Street, SW., Room 9110, Washington, DC
20410-8000, telephone 202-708-3600 (this is not a toll-free number).
Persons with hearing- or speech-impairments may access this number
through TTY by calling the toll-free Federal Information Relay Service
at 800-877-8339.
SUPPLEMENTARY INFORMATION:
Background
The HOPE for Homeowners Act of 2008, located in Title IV of
division A of the Housing and Economic Recovery Act of 2008 (HERA),
(Pub. L. 110-289, 122 Stat. 2654, approved July 30, 2008), amended
Title II of the NHA to add a new section 257. New section 257 (12
U.S.C. 1701z-22) establishes within the Federal Housing Administration
(FHA), the Program, a temporary FHA program, that offers homeowners and
existing mortgage loan holders (or servicers acting on their behalf)
insurance on the refinancing of loans for distressed mortgagors to
support long term sustainable homeownership, including among other
things, allowing homeowners to avoid foreclosure. Section 257 of the
NHA authorizes the Department of Housing and Urban Development (HUD)
acting through the FHA to insure such refinanced eligible mortgages
commencing no earlier than October 1, 2008, and such authority expires
September 30, 2011.
Under the Program, new mortgages are offered by FHA-approved
mortgagees to mortgagors who are at risk of losing their homes to
foreclosure. The new FHA-insured mortgage refinances the borrower's
existing mortgage at a significant write-down. Eligible borrowers must
be unable to afford their existing mortgage payments, must occupy the
residence that is the security for the refinanced mortgage as their
primary residence, and may not have any present ownership interest in
another residence. Investors and investor properties are not eligible
for the FHA-insured refinanced mortgages. Under the Program,
participating mortgagors share their new equity and future appreciation
with FHA. Additionally, participation in this Program is voluntary. No
mortgagees, servicers, or investors are compelled to participate.
Section 257 of the NHA prohibits the new mortgage loan insured by
FHA from exceeding 90 percent of the appraised value of the property
that is security for the mortgage, or 132 percent of the dollar amount
limitation in effect for 2007 under section 305(a)(2) of the Federal
Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) for a
property of applicable size. In addition, section 257 also provides
that the term of the FHA-insured refinanced mortgage shall have a
maturity of not less than 30 years, and must bear a single rate of
interest that is fixed for the entire term of the mortgage. Section 257
directs that a mortgagor participating in the Program may not grant a
new subordinate lien on the mortgaged property during the first 5 years
of the term of the mortgage insured under the Program, except as the
Board may determine is necessary to ensure the maintenance of property
standards, and subject to the requirements that any new outstanding
liens (1) do not reduce the value of FHA's equity in the mortgagor's
home; and (2) when combined with the mortgagor's existing mortgage
indebtedness, do not exceed 95 percent of the home's appraised value at
the time of the new subordinate lien.
The fundamental principle behind the HOPE for Homeowners Act and
this Program is that providing new equity for distressed homeowners may
be an effective way to help homeowners avoid foreclosures.
This Final Rule
Section 257(c)(1) of the NHA requires the Board to establish
requirements and standards for the Program, and prescribe such
regulations and provide such guidance as may be necessary or
appropriate to implement such requirements and standards.\1\ In
addition to this broad direction to establish requirements and
standards for the Program, section 257 also outlines specific areas for
which the Board is charged with establishing standards and policies for
the Program.
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\1\ The Board is composed of the Secretary of HUD, the Secretary
of Treasury, the Chairman of the Board of Governors of the Federal
Reserve System, and the Chairperson of the Board of Directors of the
Federal Deposit Insurance Corporation, or their respective
designees. Section 257(t) of the NHA also provides that the Board
may ``prescribe, amend, and repeal such bylaws as may be necessary
for carrying out the functions of the Board.'' Consistent with this
provision, the Board adopted bylaws regarding its organization,
staffing, and operational procedures. These bylaws were published in
the Federal Register on September 4, 2008 (73 FR 51621) and provide
that the Board's principal place of business is 451 7th Street, SW.,
Washington, DC 20410-0500.
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This final rule provides the core requirements that the Board has
determined are necessary and appropriate for the implementation and
effective administration of the Program. Consistent with section 257 of
the NHA, however, the Board may establish standards and policies
through means other than codified regulations. More detailed provisions
implementing these core requirements may be issued by the Board or FHA
through orders, a Federal Register notice, or through FHA mortgagee
letters (or similar administrative issuances). Because this is a
temporary program designed to address the immediate needs of homeowners
faced with the looming threat of foreclosure, the regulations adopted
by the Board are limited to the basic requirements of the Program. The
Board's objective is to adopt regulations that address the core
features of the Program, include necessary safety measures to avoid
fraud, waste, and abuse, and leave FHA with sufficient flexibility to
issue such guidance or processing requirements to make this a Program
that is able effectively to assist distressed homeowners avoid
foreclosure.
The regulations in this part present the purpose, the authority
delegated to FHA, and reference to FHA requirements that are applicable
to the Program.\2\ The regulations define the
[[Page 58419]]
key Program terms, and address the following Program areas:
underwriting standards, representations of the mortgagee whose
mortgagor will participate in the Program, mortgagor representations,
certain prohibitions imposed on FHA, FHA equity sharing with the
borrower, FHA appreciation sharing with the borrower, the prohibition
on subordinate liens during the first five years of the mortgagor's
Program mortgage, and applicable hearing procedures. The Board has
determined that regulations addressing these areas are necessary for
immediate implementation and long-term administration of the Program.
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\2\ Section 4(b) of the Department of Housing and Urban
Development Act, 42 U.S.C. 3533(b), provides that the Federal
Housing Commissioner shall head a Federal Housing Administration
within HUD and shall have such duties and powers as may be
prescribed by the Secretary of HUD. The Secretary of HUD has
delegated to the FHA Commissioner the power and authority to carry
out all FHA mortgage insurance programs, including authority to
issue rules or regulations to carry out these programs.
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The payment to FHA of the equity created in the property as a
result of the refinancing of the eligible mortgage is designed to avoid
any windfall to mortgagors that would arise as the result of the
refinancing. The same windfall avoidance concept also applies to the
requirement that property appreciation be shared between the homeowner
and FHA, the latter which is authorized to share any appreciation funds
with subordinate mortgage holders.
Section 257(e)(4)(B) requires that, at a minimum, the Board take
into consideration three factors in determining the amount of
appreciation a subordinate mortgage lien holder may receive. The first
factor is the status or relative priority of the subordinate liens.
This factor is addressed in the payout allocation set forth in the
rule. After sale or disposition of the property, HUD's 50 percent
appreciation interest is paid to prior mortgage lien holders in order
of the seniority in which their mortgage liens were held, to the extent
of HUD's share. Mortgage lien holders that were in 2nd position behind
the 1st mortgage will be paid first, then 3rd mortgage lien holders,
and when the claims of all prior lien holders have been satisfied, HUD
will retain the balance, if any.
The second factor is the outstanding principal and accrued but
unpaid interest of the existing senior mortgage and subordinate
mortgages. Since the total balances may not accurately reflect the
amount the mortgagee potentially could recover in a foreclosure, the
Board determined that these balances should be compared to the
appraised value of the property. Therefore, this factor is expressed in
the matrix described below as a cumulative combined loan-to-value
(CLTV).
The third factor is the extent to which the principal and accrued
interest owed on the mortgages that are senior to the particular
subordinate mortgage exceed the property's current appraised value.
This factor is taken into account as well in the matrix for
appreciation sharing because the amount a subordinate mortgage holder
may receive is based in part on the amount of principal and interest,
calculated at the pre-default contract rate, owed on those mortgages
that are more senior than the subordinate mortgage in question.
The Board gave very careful consideration to these three factors by
examining several models developed to implement this authority. The
initial models were very intricate and concern was raised that adopting
any of them would cause confusion in the mortgage marketplace, and
discourage subordinate mortgage holders and servicers from
participating in the program. The Board also considered the potential
for the existing senior mortgage holder, who will receive proceeds from
the refinancing that are likely to exceed the holder's potential
recovery in a foreclosure, to compensate a subordinate mortgage holder
to participate in the Program. The Board encourages lenders to pursue
such arrangements.
The following matrix provides the mechanism for determining the
future appreciation payment a subordinate lien holder is eligible to
receive. The Board considers a number of benefits to be present with
this approach. It provides an incentive to action by subordinate lien
holders; reduces administrative costs; is simple to calculate and easy
to understand; and voids competing appraisals.
Appreciation Sharing Payout Matrix
------------------------------------------------------------------------
Percent of
unpaid
principal and
Subordinate lien holder interest that
lien holder is
eligible to
receive*
------------------------------------------------------------------------
Cumulative CLTV >135%................................... 9%
Cumulative CLTV <=135%.................................. 12%
------------------------------------------------------------------------
* Appreciation payment to a subordinate lien holder will depend on
actual appreciation at the time of sale of the property and will be
limited by the amount of future appreciation HUD receives. Payment
will be made according to the subordinate lien holder's position of
priority in relation to the property at the time the Program mortgage
is originated, and will be based upon principal and interest on the
date of origination of the Program mortgage, calculated at the pre-
default contract rate of interest.
In establishing the maximum payments allowable to a subordinate
mortgage holder, the Board took into account information received from
market participants concerning the price received in the market
currently for delinquent subordinate mortgages. The Board expects that
the majority of subordinate mortgages offered to the Program will be
delinquent. The information provided by market participants indicates
that delinquent subordinate mortgages currently trade at substantially
below their par values, with market values within the ranges
established by the Board. Moreover, the information provided suggests
that subordinate mortgages that are even 30 days delinquent are very
likely to default and yield no recovery value to the holder of the
subordinate mortgage. Indeed, it is common practice for holders to
write-down the value of delinquent subordinate mortgages in portfolios
and in securitized pools to zero once the loans are 180 days past due.
In establishing the maximum amounts that a subordinate mortgage
holder may receive through receipt of an interest in the future
appreciation of the property, the Board also took into consideration
that subordinate mortgage holders receiving compensation in the form of
future appreciation rights, may require additional compensation to
participate in the Program to reflect the time value of money and
uncertainty about the extent and timing of property appreciation. A
certificate entitling the holder to receive a portion of future
appreciation on a property may be worth little or nothing if the
property experiences little or no appreciation. Moreover, appreciation
rights are exercised upon sale or other disposition of the property,
the timing of which is determined by the homeowner, rather than the
claim holder. As a result, if homeowners that have a mortgage insured
under the Program sell quickly, appreciation rights will have less
value. Since homeowners participating in the Program have an incentive
to sell the property to escape the shared appreciation requirement,
claim holders may discount the value of shared appreciation rights.
Accounting for these factors is inherently imprecise; nonetheless,
using models based in part on option-pricing concepts, the Board
believes that providing the holder of a subordinate mortgage the right
to receive a maximum of 9 to 12 percent of the unpaid principal and
interest on the subordinate mortgage out of the future appreciation, if
any, on the property should likely provide the
[[Page 58420]]
holder about the same risk-adjusted compensation as the holder would
receive from a current cash payment equal to the approximate current
market value of a delinquent subordinate lien of the same amount and
CLTV.
Findings and Certifications
Administrative Procedure Act
This final rule is being issued and will become effective without a
public comment period. Section 553(a) of the Administrative Procedure
Act (5 U.S.C. 551 et seq.) (APA) provides that advance notice and
public comment procedures do not apply to a matter relating to agency
management or personnel or to public property, loans, grants, benefits
or contracts (see 5 U.S.C. 553(a)). This final rule establishes
regulations for a new mortgage insurance program under the supervision
of the Board and is therefore exempt from notice and comment rulemaking
as provided in 5 U.S.C. 553(a).
This final rule will become effective upon publication in the
Federal Register. Section 553(d) of the APA provides that substantive
rules, such as this rule, shall be made effective not less than 30 days
after publication unless, among other things, an agency finds good
cause to provide an earlier effective date. Good cause exists for these
regulations to be immediately effective. This is a voluntary and
temporary program designed to address the immediate needs of homeowners
facing foreclosure, and HERA provides for this Program to begin October
1, 2008, in order that homeowners can take advantage of the mortgage
relief offered by this Program. The immediate effective date of this
rule is consistent with the statutory authority. The objective for
expedient action by the Board to have this Program commence at the
beginning of the new Federal fiscal year is motivated by the high level
of at-risk borrowers and weak conditions in the housing market.
Executive Order 12866, Regulatory Planning and Review
The Office of Management and Budget (OMB) reviewed this rule under
Executive Order 12866, Regulatory Planning and Review. OMB determined
that this rule is an economically significant regulatory action as
defined in section 3(f) of the Order. Accordingly, an economic analysis
was prepared for this rule.
This Program has the potential to have significant economic
benefits. The major unknown is participation. If 10,000 participate in
the Program, the aggregate net benefit of the Program may exceed $100M.
It is possible that there will be more participants than 10,000, or
less, in which case the net benefits increase or decrease, as the case
may be. There are other factors important in determining the aggregate
impact on the economy. The net benefit to the lender was estimated to
be $10,000 but, as the economic analysis discusses, it may be higher. A
higher net benefit to the senior lien holder would increase the
expected benefit of preventing a foreclosure. There are also economic
benefits to the community from preventing foreclosure. HUD anticipates
that the net economic benefits will exceed the costs based on initial
analysis.
The docket file for this rule, which includes the economic
analysis, is available for public inspection in the Regulations
Division, Office of General Counsel, Department of Housing and Urban
Development, 451 7th Street, SW., Room 10276, Washington, DC 20410-
0500. Due to security measures at the HUD Headquarters building, an
advance appointment to review the public comments must be scheduled by
calling the Regulations Division at 202-402-3055 (this is not a toll-
free number). Individuals with speech or hearing impairments may access
this number via TTY by calling the Federal Information Relay Service at
(800) 877-8339.
Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has federalism implications if the rule
either imposes substantial direct compliance costs on state and local
governments and is not required by statute, or the rule preempts state
law, unless the agency meets the consultation and funding requirements
of section 6 of the Executive Order. This rule does not have federalism
implications and does not impose substantial direct compliance costs on
state and local governments nor preempts state law within the meaning
of the Executive Order.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538) (UMRA) establishes requirements for federal agencies to
assess the effects of their regulatory actions on state, local, and
tribal governments and the private sector. This rule will not impose
any federal mandates on any state, local, or tribal governments or the
private sector within the meaning of UMRA.
Congressional Review Act
OMB has determined that this rule constitutes a ``major rule'' as
defined in the Congressional Review Act (CRA) (5 U.S.C. 801 et seq.).
Generally, a major rule under the CRA has a 60-day delayed effective
date and is required to be submitted to Congress in accordance with the
requirements of the CRA. Section 808 of the CRA allows a rule to become
effective sooner than otherwise provided by the CRA, if the agency, for
good cause, finds that notice and public procedure are impracticable,
unnecessary, or contrary to the public interest. This finding and a
brief statement of the reasons for the finding must be incorporated in
the rule. (See 5 U.S.C. 808(2)). As stated in this preamble under the
section that addresses APA requirements, this rule is exempt from the
notice and comment procedures of the APA. As also discussed in
connection with the APA requirements, this Program is a voluntary and
temporary measure designed to prevent eligible borrowers whose
mortgages are at risk of foreclosure from losing their homes. Some of
these borrowers are facing foreclosure now or may in the very near
future, making the need for implementation of the Program immediate. A
60-day delay in the effective date of this rule would therefore be
contrary to the public interest. Thus, good cause exists to make this
rule effective as close as possible to October 1, 2008, which is the
date on which the HERA provides for the Program to begin. The Board
will submit this rule and other required information to Congress as
required by the CRA.
List of Subjects in 24 CFR Part 4001
Administrative procedures, Practice and procedure, Mortgage
insurance, Reporting and recordkeeping requirements.
0
For the reasons set forth in the preamble, the Board of Directors of
the Hope for Homeowners Program establishes a new Chapter XXIV
consisting of part 4001 in Title 24 of the Code of Federal Regulations
to read as follows:
CHAPTER XXIV--BOARD OF DIRECTORS OF THE HOPE FOR HOMEOWNERS PROGRAM
PART 4001--HOPE FOR HOMEOWNERS PROGRAM
Subpart A--HOPE for Homeowners Program--General Requirements
Sec
4001.01 Purpose of program.
4001.03 Requirements and delegated authority.
4001.05 Approval of mortgagees.
4001.07 Definitions.
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Subpart B--Eligibility Requirements and Underwriting Procedures
4001.102 Cross-reference.
4001.104 Eligible mortgages.
4001.106 Eligible mortgagors.
4001.108 Eligible properties.
4001.110 Underwriting.
4001.112 Income verification.
4001.114 Appraisal.
4001.116 Representations and prohibitions.
4001.118 Equity sharing.
4001.120 Appreciation sharing.
4001.122 Fees and closing costs.
Subpart C--Rights and Obligations under the Contract of Insurance
4001.201 Cross-reference.
4001.203 Calculation of upfront and annual mortgage insurance
premiums for Program mortgages.
Subpart D--Servicing responsibilities
4001.301 Cross-reference.
4001.303 Prohibition on subordinate liens during first five years.
Subpart E--Enforcement
Mortgagor False Information
4001.401 Notice of false information from mortgagor-procedure.
Appraiser Independence
4001.403 Prohibitions on interested parties in insured mortgage
transaction.
Mortgagees
4001.405 Mortgagees.
Appendix A to Part 4001--Calculation of Future Appreciation Payment.
Authority: 12 U.S.C. 1701z-22.
Subpart A--HOPE for Homeowners Program--General Requirements
Sec. 4001.01 Purpose of program.
The HOPE for Homeowners Program is a temporary program authorized
by section 257 of the National Housing Act, established within the
Federal Housing Administration (FHA) of the Department of Housing and
Urban Development (HUD) that offers homeowners and existing loan
holders (or servicers acting on their behalf) FHA insurance on
refinanced loans for distressed borrowers to support long-term
sustainable homeownership by, among other things, allowing homeowners
to avoid foreclosure. The HOPE for Homeowners Program is administered
by HUD through FHA.
Sec. 4001.03 Requirements and delegated authority.
(a) Core requirements. This subpart establishes the core
requirements for the HOPE for Homeowners Program that have been adopted
by the Board of Directors (Board) for the HOPE for Homeowners Program
(Program). In addition to the core requirements, codified in this
subpart, the Board of Directors may adopt and issue additional
requirements, standards and policies through non-codified regulations,
including through order, Federal Register notice, or other statement,
such as a mortgagee letter, to be issued and implemented by FHA.
(b) Basic Program parameters. (1) FHA is authorized to insure
eligible refinanced mortgages under the Program commencing no earlier
than October 1, 2008. The authority to insure additional mortgages
under the Program expires September 30, 2011.
(2) Under this Program, an eligible mortgagor may obtain a
refinancing of his or her existing mortgage(s) with a new mortgage loan
insured by FHA, subject to conditions and restrictions specified in
section 257 of the National Housing Act and requirements established by
the Board.
(c) Delegated authority. HUD is statutorily charged with
administering, through FHA, the Program. In carrying out the Program
requirements established by the Board, FHA is directed to issue such
interim guidance and mortgagee letters as FHA determines necessary or
appropriate, within the parameters of the requirements, standards and
policies adopted by the Board. In addition to FHA's statutory charge,
the Board of Directors authorizes FHA to address unique or case-by-case
situations as may be encountered by FHA in carrying out the Program,
and to take such action as may be necessary to implement the Board's
requirements. This delegated implementing authority includes, but is
not limited to, specifying application forms, mortgage application
procedures, certifications or other assurances, and other information
collection requirements, subject to such rules, standards and policies
as the Board may adopt.
(d) Other applicable requirements. Except as may be otherwise
provided by the Board, the provisions and requirements in the FHA
regulations in 24 CFR part 203, which are generally applicable to all
FHA-insured single family mortgage insurance programs, also apply with
respect to the insurance of a refinanced eligible mortgage under the
Program.
Sec. 4001.05 Approval of mortgagees.
(a) Eligibility. In order for a mortgage to be eligible for
insurance under this part, the mortgagee originating the mortgage loan
and seeking mortgage insurance under this part shall have been approved
by the Secretary pursuant to 24 CFR part 202.
(b) Mortgagee whose loan is to be refinanced. A mortgagee holding
or servicing an eligible mortgage to be refinanced and insured under
section 257 of the National Housing Act is not required to be an
approved mortgagee as required in paragraph (a) of this section, unless
it seeks to be the originator of the refinanced mortgage to be insured
by FHA.
Sec. 4001.07 Definitions.
As used in this part and in the Program, the following definitions
apply.
Act means the National Housing Act (12 U.S.C. 1701 et seq. ).
Allowable closing costs mean charges, fees and discounts that the
mortgagee may collect from the mortgagor as provided in 24 CFR
203.27(a).
Board means the Board of Directors for the HOPE for Homeowners
Program, which is comprised of the Secretary of HUD, the Secretary of
the Treasury, the Chairman of the Board of Governors of the Federal
Reserve System (Federal Reserve Board), and the Chairperson of the
Board of Directors of the Federal Deposit Insurance Corporation or the
designees of each such individual.
Capital improvements means a repair, renovation, or addition to a
property that significantly enhances the value of the property, but
does not include expenses for interior decor, landscape maintenance, or
normal maintenance or replacement expenses.
Contract of insurance means the agreement by which FHA provides
mortgage insurance to a mortgagee.
Default and delinquency fees means late charges contained in a
mortgage/security instrument for the late or non-receipt of payments
from mortgagors after the date upon which payment is due, including
charges imposed by the mortgagee for the return of payments on the
mortgage due to non-sufficient funds.
Direct financial benefit, as used in section 257(e)(1)(A)(ii)(II)
of the Act, consists of the greater of two factors:
(1) The amount of initial equity the mortgagor has in the property
at the closing for the Program mortgage as determined under Sec.
4001.118; and
(2) The total amount that the existing senior mortgage and all
existing subordinate mortgages on the property have been written down.
Disposition means any transaction that results in whole or partial
transfer of title of a property other than--
(1) A sale of the property; or
(2) Any transaction or transfer specified in 12 U.S.C. Sec. 1701j-
3(d)(1) through (8).
Eligible Mortgage means a mortgage as defined in Sec. 4001.104.
Existing senior mortgage means an eligible mortgage that has
superior
[[Page 58422]]
priority and is being refinanced by a mortgage insured under section
257 of the Act.
Existing subordinate mortgage means a mortgage that is subordinate
in priority to an eligible mortgage which is being refinanced by a
mortgage insured under section 257 of the Act.
FHA means the Federal Housing Administration.
HOPE for Homeowners Program (or Program) means the program
established under section 257 of the Act.
HUD means the Department of Housing and Urban Development.
Intentionally defaulted for purposes of section 257(e)(1)(A) of the
Act means the mortgagor:
(1) Knowingly failed to make payment on the mortgage or debt;
(2) Had available funds at the time payment on the mortgage or debt
was due that could pay the mortgage or debt without undue hardship; and
(3) The debt was not subject to a bona fide dispute.
Mortgage has the same meaning as provided in 24 CFR 203.17(a)(1).
Mortgagee has the same meaning as provided in 24 CFR 203.251(f).
Mortgagor has the same meaning as provided in 24 CFR 203.251(e).
Premium pricing means the price for the sale of a mortgage loan
with an above market rate of interest.
Prepayment penalties mean such amounts as defined in 12 CFR
226.32(d)(6) of the Federal Reserve Board's Regulation Z (Truth in
Lending).
Primary residence means the dwelling where the mortgagor maintains
his or her permanent place of abode and typically spends the majority
of the calendar year. A mortgagor can only have one primary residence.
Program mortgage means the mortgage into which the existing senior
mortgage is refinanced.
Secretary means the Secretary of Housing and Urban Development.
Total monthly mortgage payment means the sum of:
(1) Principal and interest, as determined on a fully indexed and
fully amortized basis; and
(2) Escrowed amounts. (i) The monthly required amount collected by
or on behalf of the mortgagee for real estate taxes, premiums for
required hazard and mortgage insurance, homeowners' association dues,
ground rent, special assessments, water and sewer charges and other
similar charges required by the note or security instrument; or
(ii) For mortgages not subject to escrow deposits, \1/12\ of the
estimated annual costs for items listed in paragraph (2)(i) of this
definition.
Subpart B--Eligibility Requirements and Underwriting Procedures
Sec. 4001.102 Cross-reference.
(a) All of the provisions of 24 CFR part 203, subpart A, concerning
eligibility requirements of mortgages covering one-family dwellings
under section 203 of the National Housing Act (12 U.S.C. 1709) apply to
mortgages on one-family dwellings to be insured under section 257 of
the National Housing Act (12 U.S.C. 1701z-22), except the following
provisions: 203.7 Commitment Process; 203.10 Informed consumer choice
for prospective FHA mortgagors; 203.12 Mortgage insurance on proposed
or new subdivisions; 203.14 Builder's warranty; 203.16 Certificate and
contract regarding use of dwelling for transient or hotel purposes;
203.18 Maximum mortgage amounts; 203.18a Solar-energy system; 203.18b
Increased mortgage amount; 203.18c One-time or up-front MIP excluded
from limitations on maximum mortgage amounts; 203.18d Minimum principal
loan amount; 203.19 Mortgagor's minimum investment; 203.20 Agreed
interest rate; 203.29 Eligible mortgage in Alaska, Guam, Hawaii or the
Virgin Islands; 203.32 Mortgage lien; 203.37a Sale of property; 203.42
Rental properties; 203.43 Eligibility of miscellaneous types of
mortgages; 203.43a Eligibility of mortgages covering housing in certain
neighborhoods; 203.43d Eligibility of mortgages in certain communities;
203.43e Eligibility of mortgages covering houses in federally impacted
areas; 203.43g Eligibility of mortgages in certain communities; 203.43h
Eligibility of mortgages on Indian land insured pursuant to section 248
of the National Housing Act; 203.43i Eligibility of mortgages on
Hawaiian Home Lands insured pursuant to section 247 of the National
Housing Act; 203.43j Eligibility of mortgages on Allegany Reservation
of Seneca Nation Indians; 203.44 Eligibility of advances; 203.45
Eligibility of graduated payment mortgages; 203.47 Eligibility of
growing equity mortgages; 203.49 Eligibility of adjustable rate
mortgages; 203.50 Eligibility of rehabilitation loans; 203.51
Applicability; and 203.200-203.209 Insured Ten-Year Protection Plans
(Plan).
(b) For the purposes of this subpart, all references in 24 CFR part
203, subpart A, to section 203 of the Act shall be construed to refer
to section 257 of the Act. Any references in 24 CFR part 203, subpart
A, to the ``Mutual Mortgage Insurance Fund'' shall be deemed to be to
the Home Ownership Preservation Entity Fund, and any references to
``the Commissioner'' shall be deemed to be to the Board or the
Commissioner (as the context may require).
(c) If there is any conflict in the application of any requirement
of 24 CFR part 203, subpart A, to this part the provisions of this part
shall control.
Sec. 4001.104 Eligible mortgages.
A mortgage eligible to be refinanced under section 257 of the Act
must:
(a) Have been originated on or before January 1, 2008;
(b) Be secured by a property owned and occupied by the mortgagor as
his or her primary residence, and be the only residence in which the
mortgagor has any present ownership interest; and
(c) Meet such other requirements as the Board may adopt.
Sec. 4001.106 Eligible mortgagors.
In order for a mortgagor to be eligible to refinance his or her
existing mortgages under section 257 of the Act, the mortgagor must:
(a) Have had, on March 1, 2008, a monthly total mortgage payment of
more than 31 percent of the mortgagor's monthly gross income;
(b) Not have an ownership interest in any other residential
property;
(c) Not have been convicted of fraud under federal or state law in
the past 10 years;
(d) Certify that the mortgagor has not intentionally defaulted on
any mortgage or debt and has not knowingly, or willfully and with
actual knowledge, furnished material information know to be false for
purposes of obtaining any Program mortgage; and
(e) Meet such other requirements as the Board may adopt.
Sec. 4001.108 Eligible properties.
(a) A mortgage may be insured under the Program only if the
property that is to be the security for the mortgage is a one-family
residence.
(b) The following property types are eligible to secure a mortgage
insured under the Program:
(1) Detached and semi-detached dwellings;
(2) A condominium unit;
(3) A cooperative unit; or
(4) A manufactured home that is permanently affixed to realty and
is treated as realty under applicable state law except state taxation
law.
Sec. 4001.110 Underwriting.
A mortgage may be insured under the Program only if the following
conditions are met:
[[Page 58423]]
(a) Debt-to-income thresholds. Except as provided in paragraph (c)
of this section:
(1) Payment-to-income. The total monthly mortgage payment of the
mortgagor under the Program mortgage does not exceed 31 percent of the
mortgagor's monthly gross income; and
(2) Debt-to-income. The sum of the total monthly mortgage payment
under the Program mortgage and all monthly recurring expenses of the
mortgagor does not exceed 43 percent of the mortgagor's monthly gross
income.
(b) Past credit performance. The mortgagor must have made at least
six full payments on the existing senior mortgage being refinanced
under the Program.
(c) Trial modifications. For any mortgagor who is unable to meet
the requirements of paragraph (a) of this section, a mortgage loan may
nevertheless be presented for insurance by FHA under the Program if:
(1) The mortgagor, using existing income, has made full and timely
mortgage payments on the existing senior mortgage pursuant to the terms
of the trial modification:
(i) For the three consecutive months before submission of the
application for the mortgage to be insured under the Program; and
(ii) In an amount that is at least 90 percent of the estimated
total monthly mortgage payment to be paid by the mortgagor on the
Program mortgage.
(2) The total monthly mortgage payment of the mortgagor under the
Program mortgage does not exceed 38 percent of the mortgagor's monthly
income; and
(3) The sum of the total monthly mortgage payment under the Program
mortgage and all monthly recurring expenses of the mortgagor does not
exceed 50 percent of the mortgagor's monthly gross income.
(d) Non-occupant co-borrowers. A mortgage loan may be insured by
the FHA under the Program, even if one of the mortgagors on the loan
(i.e. , a co-signer) does not reside at the residence securing the
loan, provided that the non-resident mortgagor relinquishes all
interests in the property that is to be security for the mortgage
before an application is submitted for FHA insurance under the Program.
(e) Amount of new mortgage payment. The mortgagor's total monthly
payment on the mortgage to be insured under the Program must not be
greater than the mortgagor's aggregate total monthly mortgage payment
under the mortgagor's existing senior mortgage and all existing
subordinate mortgages.
(f) Limit on origination fees. Mortgagees may charge and collect
from mortgagors allowable closing costs.
Sec. 4001.112 Income verification.
The mortgagee shall use FHA's procedures to verify the mortgagor's
income and shall comply with the following additional requirements:
(a) The mortgagee shall document and verify the income of the
mortgagor by obtaining a transcript of the borrower's Federal income
tax returns or a copy of the borrower's Federal income tax returns
obtained directly from the Internal Revenue Service for the most recent
two years; and
(b) The mortgagee shall document and verify the mortgagor's income
in any case in which the mortgagor has not filed a Federal income tax
return.
Sec. 4001.114 Appraisal.
(a) The property shall be appraised by an appraiser on the FHA
Appraiser Roster.
(b) An appraisal of a property to be security for a Program
mortgage shall be conducted in accordance with Uniform Standards of
Professional Appraisal Practice (USPAP) but dated no more than 90 days
from the date on which the mortgage transaction is closed, except as
otherwise provided by the Board.
(c) The mortgagee must inform the appraiser that copies of the
appraisal may be shared with holders and servicers of existing
subordinate mortgages.
Sec. 4001.116 Representations and prohibitions.
(a) Underwriting and appraisal standards. In order for the Program
mortgage to be eligible for insurance under the Program, the
underwriter and the mortgagee must provide certifications, in a format
approved by the FHA, that the mortgage is in compliance with the
underwriting and the appraisal standards set forth in this part, and
that it meets all requirements applicable to the Program. FHA may
require additional certifications by the mortgagee to ensure compliance
with such additional standards as the FHA deems necessary given the
specific mortgage transaction presented.
(b) Mortgagor's liability for repayment. (1) The mortgagor shall
provide a certification to FHA that the mortgagor has not:
(i) Intentionally defaulted on the mortgagor's existing
mortgage(s), or any other debt; or
(ii) Knowingly or willfully and with actual knowledge furnished
material information known to be false for the purpose of obtaining the
mortgagor's existing mortgage(s).
(2) The mortgagor shall provide any other certifications that FHA
may otherwise require.
(3) A mortgagor obligated under a Program mortgage shall agree in
writing, on a form approved by the Board, to be liable to pay to FHA
any Direct Financial Benefit achieved from the reduction of
indebtedness on the existing senior and subordinate mortgages that are
being refinanced under the Program if he or she makes a false statement
or other misrepresentation in the certifications and documentation
required for Program eligibility, including but not limited to the
certifications required under section 257(e)(1)(A)(i) of the Act.
(c) Mortgagee in violation of Program requirements. (1) If the
mortgagee holds a Program mortgage that it originated and/or
underwrote, and FHA finds that the mortgagee violated the Program
requirements, FHA is prohibited from paying FHA insurance benefits to
that mortgagee.
(2) If the mortgagee no longer holds the Program mortgage that it
originated and/or underwrote, FHA will pay the insurance claim to the
mortgagee presently holding the Program mortgage (if all other
requirements of the contract for mortgage insurance are met and the
present holder did not participate in the violation of Program
requirements) and shall seek indemnification from the non-holding
mortgagee.
(d) FHA insurance. A mortgage is eligible for insurance if the
mortgagee submits a complete case binder within 120 days from the date
of closing of the mortgage, or such other time as the Board may
prescribe. The binder shall include evidence acceptable to the Board
that the mortgage is current.
(e) Mortgagor failure to make first mortgage payment. FHA shall not
pay a mortgage insurance claim to any mortgagee if the first total
monthly mortgage payment is not made within the time frame established
in paragraph (d) of this section. The mortgagee shall not, directly or
indirectly, make all or a part of the first total monthly mortgage
payment on behalf of the mortgagor. The mortgagee is prohibited from
escrowing funds at closing for all or part of the first total monthly
mortgage payment.
Sec. 4001.118 Equity sharing.
(a) Initial Equity. For purposes of section 257(k)(1) of the Act,
the initial equity created as a direct result of the origination of a
Program mortgage on a property, as calculated by the Program mortgage
lender, shall equal:
(1) The appraised value of the property that was used at the time
of origination of the Program mortgage to
[[Page 58424]]
underwrite the mortgage and to determine compliance with the maximum
loan-to-value ratio at origination established by section 257(e)(2)(B)
of the Act; less
(2) The original principal amount of the Program mortgage on the
property.
(b) FHA's interest. Upon the sale or disposition of a property or
Program mortgage refinancing, FHA shall calculate and be entitled to
receive the portion of the initial equity (as defined by paragraph (a)
of this section) set forth in section 257(k)(1) of the Act, subject to
such standards and policies as the Board may establish.
Sec. 4001.120 Appreciation sharing.
(a) Calculation of appreciation. For purposes of section 257(k)(2)
of the Act, the amount of the appreciation in value of a property
securing a Program mortgage that occurs between the date the mortgage
was insured under section 257 of the Act and the date of any subsequent
sale or disposition of the property shall be equal to the following, as
such amounts of appreciation may be established to the satisfaction of
FHA:
(1) The gross proceeds from the sale or disposition of the property
(calculated at the pre-default rate of interest); less
(2) The amount of closing costs, as adopted by the Board, incurred
by the mortgagor(s) in connection with such sale or disposition, if
any; less
(3) Seventy-five percent, as may be modified by the Board, of the
actual expenditures for Capital Improvements made by the mortgagor(s)
after the date of origination of the Program mortgage; and less
(4) The appraised value of the property that was used at the time
of origination of the Program mortgage to underwrite that mortgage and
determine compliance with the maximum loan-to-value ratio at
origination established by section 257(e)(2)(B) of the Act.
(b) HUD's interest in appreciation. Upon sale or disposition of a
property securing a Program mortgage, FHA shall be entitled to receive
an amount equal to 50 percent of the appreciation in value of the
property calculated in accordance with paragraph (a) of this section.
(c) Eligibility of subordinate mortgage holders to receive a
portion of appreciation in value. The persons or entities that hold, on
the date of origination of a Program mortgage, an existing subordinate
mortgage on the property shall be eligible to receive a portion of
FHA's interest in the appreciation in value of the property, as
determined in accordance with the provisions of this section and such
additional standards and policies that the Board may establish, if:
(1) The existing subordinate mortgage was originated on or before
January 1, 2008;
(2) The amount of the unpaid principal and interest on such
existing subordinate mortgage on the date of origination of the Program
mortgage is at least $2,500; and
(3) Each person holding such existing subordinate mortgage agrees,
in connection with the origination of the Program mortgage, to fully
release:
(i) The mortgagor(s) from any indebtedness under the existing
subordinate mortgage; and
(ii) The holder's mortgage lien on the property.
(d) Shared appreciation interest of subordinate mortgage holders.
(1) In general. The eligible holder(s) of an existing subordinate
mortgage on a property securing a Program mortgage shall be eligible to
receive, subject to paragraph (c)(3) of this section, an interest in
FHA's interest in the appreciation in the value of such property up to
the amount set forth in the Appendix to this part.
(2) Form. The interest of an eligible holder of an existing
subordinate mortgage under paragraph (d) of this section is evidenced
in a shared appreciation certificate or other documentation to be
issued by, or on behalf of, HUD.
(3) Multiple subordinate liens. If there is more than one eligible
existing subordinate mortgage on a property securing a Program
mortgage, the interests of such eligible existing subordinate mortgages
under paragraph (d)(1) of this section shall have priority among each
other in the same order of priority that existed among the existing
subordinate mortgages on the date of origination of the Program
mortgage.
(4) Distribution of appreciation interest to subordinate mortgage
holders. Upon the sale or disposition of a property securing a Program
mortgage other than sale or disposition related to a default, any
proceeds due to FHA as a result of the appreciation in value of the
property (as calculated in accordance with paragraph (a) of this
section) shall be distributed:
(i) First to the holders of any shared appreciation certificate or
other documentation issued by HUD with respect to the property, if any,
in accordance with paragraphs (d)(1), (d)(2), and (d)(3) of this
section; and
(ii) The remaining amounts, if any, will be retained by FHA.
Sec. 4001.122 Fees and closing costs.
(a) The holder or servicer of the existing senior and subordinate
mortgages shall either forgive or waive all prepayment penalties and
delinquency and default fees.
(b) Allowable closing costs incurred in connection with the
refinancing and insurance of a mortgage under the Program can be paid
from the following sources:
(1) The mortgagor's assets;
(2) The mortgagee holding or servicing the existing senior and
subordinate mortgage or the mortgagee originating the Program mortgage;
(3) Premium pricing by the mortgagee providing the Program
mortgage;
(4) Financed as part of the Program mortgage provided that the
mortgage amount is adjusted accordingly, and the loan-to-value ratio
does not exceed 90 percent (including the up-front premium required
under Sec. 4001.203(a)(1));
(5) A Federal, state, county or parish, or municipal program; or
(6) Such other sources as the Board may permit.
Subpart C--Rights and Obligations Under the Contract of Insurance
Sec. 4001.201 Cross-reference.
(a) All of the provisions of 24 CFR part 203, subpart B, covering
mortgages insured under section 203 of the Act shall apply to mortgages
insured under section 257 of the Act, except the following sections:
203.256 Insurance of open-end advances; 203.259a Scope; 203.260 Amount
of insurance premium; 203.261 Calculation of periodic MIP (periodic
MIP); 203.270 Open-end insurance charges; 203.280 One-time of Up-front
MIP; 203.281 Calculation of one-time MIP; 203.283 Refund of one-time
MIP; 203.284 Calculation of up-front and annual MIP on or after July 1,
1991; 203.285 Fifteen year mortgages: calculation of up-front and
annual MIP on or after December 26, 1992; 203.415-203.417 Certificate
of Claim; 203.420-203.427 Mutual Mortgage Insurance Fund and
Distributive Shares; 203.436 Claim procedures--graduated payment
mortgages; 203.438 Mortgages on Indian land insured pursuant to section
248 of the National Housing Act; 203.439 Mortgages on Hawaiian home
lands insured pursuant to section 247 of the National Housing Act;
203.439a Mortgages on property in Allegheny Reservation of Seneca
Nation of Indians authorized by section 203(q) of the National Housing
Act; and 203.440-203.495 Rehabilitation Loans.
(b) For the purposes of this subpart, all references in 24 CFR part
203, subpart B, to section 203 of the Act shall be construed to refer
to section 257 of the Act. Any references in 24 CFR part
[[Page 58425]]
203, subpart B, to the ``Mutual Mortgage Insurance Fund'' shall be
deemed to be to the Home Ownership Preservation Entity Fund, and any
references to ``the Commissioner'' shall be deemed to be to the Board
or the Commissioner (as the context may require).
(c) If there is any conflict in the application of any requirement
of 24 CFR part 203, subpart B, to this part 4001, the provisions of
part 4001 shall control.
Sec. 4001.203 Calculation of upfront and annual mortgage insurance
premiums for Program mortgages.
(a) Applicable premiums. Any mortgage presented for endorsement
under section 257 on or after October 1, 2008, and prior to September
30, 2011, shall be subject to the following requirements:
(1) Upfront premium. FHA shall establish and collect a single
premium payment equal to 3 percent of the amount of the original
insured principal obligation of the Program mortgage.
(2) Annual premium. In addition to the premium under paragraph
(a)(1) of this section, FHA shall establish and collect an annual
premium payment in an amount equal to 1.5 percent of the amount of the
remaining insured principal balance of the Program mortgage.
(b) Proceeds for payment of the upfront premium. The up-front
premium shall be paid with proceeds from the Program mortgage through a
reduction of the amount of indebtedness that existed on the eligible
mortgage prior to its being refinanced.
Subpart D--Servicing Responsibilities
Sec. 4001.301 Cross-reference.
(a) All of the provisions of 24 CFR part 203, subpart C, covering
mortgages insured under section 203 of the Act shall apply to mortgages
insured under section 257 of the Act, except as follows: 203.664
Processing defaulted mortgages on property located on Indian land;
203.665 Processing defaulted mortgages on property located on Hawaiian
home lands; 203.666 Processing defaulted mortgages on property in
Allegany Reservation of Seneca Nation of Indians; and 203-670-203.681
Occupied Conveyance.
(b) For the purposes of this subpart, all references in 24 CFR part
203, subpart C, to section 203 of the Act shall be construed to refer
to section 257 of the Act. Any references in 24 CFR part 203, subpart
C, to the ``Mutual Mortgage Insurance Fund'' shall be deemed to be to
the Home Ownership Preservation Entity Fund, and any references to
``the Commissioner'' shall be deemed to be to the Board or the
Commissioner (as the context may require).
(c) If there is any conflict in the application of any requirement
of 24 CFR part 203, subpart C, to this part 4001, the provisions of
part 4001 shall control.
Sec. 4001.303 Prohibition on subordinate liens during first five
years.
(a) Prohibition on subordinate liens during first five years.
Except as provided in paragraph (b) of this section, a mortgagor shall
not, during the first 5 years of the term of the mortgagor's Program
mortgage, incur any debt, take any action, or fail to take any action
that would have the direct result of causing a lien to be placed on the
property securing the Program mortgage if such lien would be
subordinate to the Program mortgage.
(b) Property preservation exception. Paragraph (a) of this section
shall not prevent a mortgagor on the Program mortgage from incurring
new mortgage debt secured by a lien on the property securing the
Program mortgage that is subordinate to the Program mortgage if:
(1) The proceeds of the new mortgage debt are necessary to ensure
the maintenance of property standards, including health and safety
standards;
(2) Repair or remediation of the condition would preserve or
increase the property's value;
(3) The cost of the proposed repair or remediation is reasonable
for the geographic market area;
(4) The results of the repair or remediation are not primarily
cosmetic;
(5) The repair or remediation does not represent routine
maintenance;
(6) The new mortgage debt is closed-end credit, as defined in Sec.
226.2 of the Federal Reserve Board's Regulation Z (12 CFR 226.2); and
(7) The sum of the unpaid principal balance and accrued and unpaid
interest on the Program mortgage and the original principal balance of
the new mortgage debt:
(i) Does not exceed 95 percent of the estimated appraised value of
the property securing the Program mortgage after completion of the
proposed repair or remediation; and
(ii) Is less than:
(A) The estimated appraised value of the property securing the
Program mortgage after completion of the proposed repair or
remediation; less
(B) FHA's proportionate share of the initial equity created upon
origination of the Program mortgage as determined pursuant to the
schedule set forth in section 257(k)(1) of the Act as if a sale of the
property had occurred on the date of origination of the new mortgage
debt.
Subpart E--Enforcement
Mortgagor False Information
Sec. 4001.401 Notice of false information from mortgagor-procedure.
(a) If FHA finds that the mortgagor has made a false certification
or provided false information via any means, including but not limited
to false documentation, FHA shall inform the mortgagor, in writing or
any other acceptable format, of such fact.
(b) The notice shall be sent to the mortgagor's last known address
by both certified and ordinary mail. The notice shall state with
specificity the misrepresentation or false statement made by the
mortgagor. The notice shall include a request for repayment of the
Direct Financial Benefit that the mortgagor is deemed to have received,
as determined by FHA, by the refinancing of the eligible mortgage and
subordinate mortgages. This does not preclude HUD or the United States
from bringing any other action that they may be authorized to bring.
(c) The mortgagor may request a hearing before a Hearing Officer.
The hearing will be conducted in accordance with the provisions of 24
CFR part 26, subpart A, except as modified by this section. Requests
for a hearing must be made within 45 days from the date of the false
information notice.
Appraiser Independence
Sec. 4001.403 Prohibitions on interested parties in insured mortgage
transaction.
(a) A mortgage lender, mortgage broker, mortgage banker, real
estate broker, appraisal management company or employee thereof, and
any person with an interest in a real estate transaction involving an
appraisal conducted as part of the process for insuring a mortgage
under section 257 of the Act shall not improperly influence or attempt
to improperly influence through any means, including but not limited to
coercion, extortion, collusion, compensation, instruction, inducement,
intimidation, nonpayment for services rendered, or bribery, the
development, reporting, result or review of a real estate appraisal
sought in connection with the origination, processing and closing of
the mortgage for insurance.
(b) HUD may, pursuant to its authority under section 536(a) of the
Act, bring an action to impose a civil money penalty for a violation of
paragraph (a) of this section.
(c) The authority to bring a civil money penalty under this section
shall not preclude HUD from bringing any other action that HUD may be
[[Page 58426]]
authorized to bring for a violation of paragraph (a) of this section.
Mortgagees
Sec. 4001.405 Mortgagees.
(a) FHA is authorized by the Board to engage in monitoring
activities to ensure mortgagee compliance with the requirements of this
Program. The Mortgagee Review Board at HUD is authorized by the Board
to impose sanctions and civil money penalties against mortgagees that
violate program requirements under this part. The authority of the
Mortgagee Review Board to impose sanctions and civil penalties shall
not preclude HUD from bringing any other action that HUD may be
authorized to bring.
(b) Nonpayment of mortgage insurance claims for reasons established
in Sec. 4001.16 shall not preclude the Mortgagee Review Board or HUD
from bringing any action against the mortgagee that the Mortgagee
Review Board or HUD are authorized to bring.
(c) The mortgagee may request a hearing before a Hearing Officer.
The hearing will be conducted in accordance with the provisions of 24
CFR part 26, subpart A, except as modified by this section. Requests
for a hearing must be made within 45 days from the date of the false
information notice.
Appendix A to Part 4001--Calculation of Future Appreciation Payment
------------------------------------------------------------------------
Percent of
unpaid
principal and
Subordinate lien holder's CLTV interest that
lien holder is
eligible to
receive
------------------------------------------------------------------------
Cumulative CLTV >135%................................... 9%
Cumulative CLTV <=135%.................................. 12%
------------------------------------------------------------------------
Note: Appreciation payment to a subordinate lien holder will depend on
actual appreciation at the time of sale of the property and will be
limited by the amount of future appreciation HUD receives. Payment
will be made according to the subordinate lien holder's position of
priority in relation to the property at the time the H4H mortgage is
originated, and will be based upon principal and interest on the date
of origination of the Program mortgage, calculated at the pre-default
contract rate of interest.
Dated at Washington, DC, this 30th day of September, 2008.
By order of the Board of Directors of the HOPE for Homeowners
Program.
Margaret E. Burns,
Executive Director of the Board.
[FR Doc. E8-23612 Filed 10-3-08; 8:45 am]
BILLING CODE 4210-AA-P
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/ 2008
/ October
/ Monday, October 06, 2008
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