Home Owner Tax Credit

What is Hope for Home Owners Program

Hope for Home Owners is a program for homeowners who are facing problems with their home mortgages. The Congress passed this bill in 2008 and is effective until 2011. The purpose of the bill is to help at least 400,000 home owners who are on the brink of losing their homes to foreclosures. It is a refinance loan program that extends to 30 years with a fixed rate. Congress announced in March of 2008 that they have set aside $300B for the said program.

How can the program help homeowners who are having problems paying their mortgage? If you are a homeowner with an existing loan from a lender for your home, this program is targeted to help you. You approach your lender and ask if they participate in the program. If they do, you can apply under the program. When your application is accepted, you will pay lower amount in mortgage because your loan will be extended to 30 years.

In addition to that, part of the loan is ensured by the Federal Housing Authority. Also, if the lender decides to participate in the program, they can reduce the loan to 90% of its appraised current value. If you have a loan amounting to $190,000 for example, it will be reduced to only $171,000. This means that the lender will forgive $19,000. This is a big help especially for those who are having problems with their cash flow.

Hope for Home Owners: Why it Failed

It has been more than a year since this program was passed by the Congress but there are only a handful of home owners that took advantage of the program. One problem that analysts give is that there is a problem with information dissemination. Home owners don’t know that there is such a program. During the first month that the program took effect, only 700 people applied and only 1 was approved.

Another reason is that mortgage companies and banks don’t’ want to participate. This program is voluntary both on the part of the lender and the home owner. Lenders don’t want to participate because they will lose a lot of potential income from the reduction of the amount of loan. Since it is voluntary, there are very few lenders who are willing to help home owners prevent foreclosure.

If you are one of the homeowners who are planning to apply for the Hope for home owners program, mortgage consultants will advise you not to pursue with it. They feel that it’s just a waste of time and effort because mortgage companies won’t help you. It is better to learn more about home owner tax credit because this program will be more of use to you.