FHA: H4H Could Help Underwater Borrowers

As the Obama Administration wrestles with ways to help unemployed and underwater homeowners, the Federal Housing Administration is going back to see what it can do to kick start the Hope for Homeowners program. "The Hope for Homeowners could help underwater borrowers," FHA commissioner recently told reporters. The H4H program has gone through several makeovers since Congress first created the special refinancing program in 2008, but it has never lived up to its promise. FHA lenders made only 22 H4H loans in fiscal year 2009, which ended September 30. In the fourth quarter of this calendar year, 23 H4H loans have been approved. The H4H program depends on mortgage investors writing down the principal amount of the loan to a 96.5% loan-to-value ratio and taking a hit. The only benefit for investors is the existing loan is refinanced into a new FHA-insured loan and they are protected from further losses. FHA made some changes to the H4H program last year. "We are now assessing how well that is going to work and what we need to do differently," Mr. Stevens said.