Hope Lenders Want Restructuring Trial Runs

Lenders participating in the Hope for Homeowners program want to restructure underwater mortgages on a trial basis for three or six months to make sure the borrower can make the payments and the Federal Housing Administration will insure the new loan, MortgageWire has learned. During a conference call with industry executives, Department of Housing and Urban Development officials seemed receptive to this idea, sources said. Lenders are expected to reduce the principal to a 90% loan-to-value ratio under the Hope program. And they don't want to take the writedown until they are sure the FHA will insure the new loan. Under HUD rules, the FHA cannot insure a loan if the borrower misses the first payment. Meanwhile, HUD is under tremendous pressure to issue guidelines for the Hope program before Oct. 1. Industry groups are telling HUD that they cannot begin to identify borrowers who could benefit from the foreclosure rescue program until they see the guidelines.