Released: October 19, 2008

With HOPE for Homeowners, you’ll pay in long run

Source: Michelle Singletary, Washington Post (Free Registration)

For homeowners trying to renegotiate their loans under the government’s new HOPE for Homeowners program, please read the paperwork carefully - because once again, you’ll be stuck with a costly mortgage deal.

HOPE for Homeowners, nicknamed H4H, became law this summer to help keep homeowners from defaulting on their mortgages and going into foreclosure. Lenders who voluntarily allow borrowers to refinance under H4H are required to reduce the size of the mortgage to a maximum of 90 percent of the home’s current appraised value. Additionally, they are only allowed to put people in 30-year, fixed-rate loans.

The Federal Housing Administration will insure up to $300 billion of these new loans. As many as 400,000 homeowners could avoid foreclosure through H4H over the next three years.

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