FHA HOPE for Homeowners H4H           

              Calculating the Maximum Mortgage Amount 

The amount of the H4H mortgage may not exceed a nationwide maximum mortgage limit of $550,440.  The LTV of the H4H mortgage is limited to 90 percent of current appraised value of the property, including the UFMIP.  The proceeds from the new H4H mortgage will be applied to the existing senior mortgage, and extinguish all mortgage-related debts under all existing mortgages including:   

·        Advances by existing lenders/servicers for taxes, hazard insurance and/or mortgage insurance; and 

·        Out of pocket third party legal expenses of the existing lenders/servicers associated with foreclosures and preservation and protection.

Closing Costs and Prepaid Items 

            Standard FHA policy regarding closing costs is applicable, including the 1 percent cap on origination fees.  The origination fee compensates the lender for administrative costs in originating and closing the loan.  The origination fee covers administrative costs for taking the loan application, evaluating, preparing and submitting a proposed mortgage loan. The origination fee cannot be supplemented by other fees to cover these administrative costs, such as “application or processing” fees or broker fees.  The origination fee cannot exceed the greater of $20 or one percent of the original principal amount of the mortgage (excluding any one-time mortgage insurance premium). 

FHA does not require that closing costs and prepaid items come from the borrower’s own assets, giving lenders and borrowers the flexibility to determine which of the following options (or combination of options) should be used to pay these costs: 

·        Borrowers pay closing costs and prepaid items from their own assets; 

·        The closing costs and prepaid items may be financed into the mortgage provided the LTV does not exceed 90 percent, including UFMIP; 

·        The servicing lender, originating lender and/or a third party (e.g., a Federal, state or local Program) may pay the closing costs and prepaid items; and/or 

·       The originating lender may pay the borrower’s closing costs and prepaid items through premium pricing.

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