Hope Program to Allow Payment 'Trials'

The Hope for Homeowners program will allows lenders to conduct "trials" to see if troubled borrowers can make their payments under a newly refinanced Federal Housing Administration mortgage. Congress directed the Department of Housing and Urban Development to establish the special FHA refinancing program, and the department is issuing lender and servicer guidance on Oct. 1. "I strongly encourage homeowners and lenders to look into this program," HUD Secretary Steve Preston said. At the request of lenders, the Hope program provides for a "minimum three consecutive month trial modification" for borrowers with higher-than-normal debt-to-income ratios. The origination guidance also allows second lienholders to share in future appreciation of the property, if they waive all rights to collect existing debt.