Economic Development and Public Finance Working Paper Series
REP 08-04, The Impact of the HOPE for Homeowners Program Rule, by Alastair W. McFarlane, Edward Szymanoski, and Kurt G. Usowski.
The Housing and Economic Recovery Act of 2008 (HERA) established the temporary HOPE for Homeowners Program. The Program allows homeowners to avoid foreclosure, using the Federal Housing Administration (FHA) insurance program structure already in-place at the Department of Housing and Urban Development. Under the Program, certain borrowers facing difficulties with their mortgages will be eligible to refinance into FHA-insured mortgages. The Program was implemented on October 1, 2008 and will last through September 30, 2011. FHA will insure up to $300 billion in new loans. Borrowers will pay FHA an upfront mortgage insurance premium of 3 percent of the original insured mortgage amount and an annual premium of 1.5 percent of the outstanding balance thereafter.
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