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As mentioned in part one, Congress passed into law the Housing and Economic Recovery Act of 2008. It became effective October 1, 2008 and included new mandated FHA refinance loan guidelines. This program, that is named “HOPE for Homeowners Act of 2008″, can help many of you who are facing eminent foreclosure of your home residence.

Some additional requirements are stipulated before you can participate in this program. You must have any type of current subordinate liens resolved before you will be accepted to the program. These types of liens include, home equity loans, second mortgage loans, etc. You will have to resolve these issues with your primary lien holder through a negotiation process.

The normal mortgage insurance premium that has always been required with FHA refinance loans will be altered in the new Housing and Economic Recovery Act of 2008. The typical front-end mortgage insurance and monthly payments have been changed and are effective October 1, 2008 and remain in force for one year. You will now be able to have your front-end insurance premium financed as part of the loan total. The complete list of the new insurance changes and any additional fees can be found by reading the specifics of the law at fha.gov.

The new FHA refinance loan process takes many factors into consideration. Each loan originated will be based on the merits of your financial strength. You will need to provide extensive paperwork that includes proof of your income, your credit score reports, your bank account information and a complete history of your employment. All documentation you provide will be positively verified as to its veracity.

Additionally, you will need to have a current appraisal executed on your residence to ascertain its present market value rate. Based on the appraisal findings and the amount you owe on the home, if your home is found to contain no equity, you will need to take further measures. You will have to contact your mortgage lender and attempt to have your home loan reduced. This is commonly referred to as a write down. The new law stipulates that if you have no equity in your house you must have your current mortgage loan written down to 90% of its newly appraised value. The FHA refinance loan can proceed if your lender concurs with the write down.

Related posts:

1. Housing Rescue Bill And FHA Refinance Loan – Part One
2. What Are The Home Equity Loan Rules In Texas?
3. New FHA Loan Program Availability
4. Getting Refinance Home Loan Rate Quotes
5. Removal Of MIP From FHA Loans