Thinking of refinancing to today's great rates? BEWARE before you commit!

Saint Paul, Minnesota: Real 30-year fixed interest rates without discount points have been hovering right about 5% lately for those with high credit scores and plenty of equity. Lender phones are ringing off the hook with mortgage refinance applications at their highest level in more than 5-years!

While this sounds great, applications don't necessarily equal loan closings. A monstrous black cloud is about to burst on many unsuspecting applicants.

Two major issues are crushing refinance dreams as after application, many borrowers are finding out they do not have the equity position or credit to actually get a great deal closed.

A prime example is a customer of mine who bought a new home in October 2006. At the time, he put 25% down from the sale of his previous home. Today, I would be able to lower his interest rate about 1.25%. This would save him approximately $202 per month. Payback for closing costs is under two years, and he plans on living in the home a long time. Therefore this customer would appear ripe for a refinance.

Problem one? His property value has dropped to a level where his NEW loan would have a loan-to-value of 90% (a loss of 15% in value).

I now have to add mortgage insurance to his loan, MAKING HIS NEW GREAT RATE REFINANCE PAYMENT GO UP. Dead deal.

Problem two? Credit score requirements. Another recent customer has a first and second loan he wants to refinance into one new loan at today's great rates. He has heard all the rate news and is ready to take advantage, as he thinks he could lower his rate 1.25%.

In years past, if you qualified for a conforming loan, everyone got the same conforming rate. It didn't matter if your score was a 620, or an 800. Today, you may get a conforming loan, but rates vary greatly depending on your personal situation.

In my example case, because we are paying off a second mortgage, this is considered a higher risk "cash out" transaction. His middle credit score was just 659. Therefore, while I could do the loan, his rate would have been 5.875%, down just 1/4%. Dead deal.

Bad lender problems too. To further complicate matters, and to potentially throw more egg on the mortgage industry face, inexperienced and bad lenders once again are promising the world to customers without doing a proper analysis of the customers situation.

Many of these lenders demand $300 - $500 non-refundable application fees, then send an appraiser to the customers home. The appraisers are told to collect their fee "at the door".

Two weeks later, the customer is told one of the two examples above, and that their great deal isn't so great after all and the application does NOT turn into a closing.

DON'T LET THIS BE YOU.  Make sure you are working with a true professional Loan Officer and Mortgage Company. Make sure you ask about credit scores and talk about estimated property values and how they may effect your great deal.

DO NOT EVER PAY APPLICATIONS FEES, and DON'T believe everything you hear, especially from a telemarketer. There are plenty of sharks still left in the mortgage sea.

With a little customer knowledge, you may be able to take advantage of today's rates, or save yourself unnecessary application fees and appraisal costs.

(c) 2009. Metzler Group. www.JoeMetzler.com

Should you be buying a home, modifying your existing loan, refinancing, or running away?

Saint Paul, MN: These are certainly trying times, and 70% of homeowners have some sort of financing on their home. The economy is hurting, and fear of job loss is on many minds. But what you should be doing in today's market isn't always clear.

The economy is hurting largely because of the initial wave of foreclosures and high gas prices of earlier in 2008. This has spilling over into all aspects of American lives, but is it really as bad as the constant beat of the media drum has one to believe?

Unemployment nationwide is averaging in the 6% range. This is significantly below the highs of years past. retailer are reporting bad Christmas numbers, down some 6-8%. Foreclosures are still at historic high levels. These reports sound bad, but sit back and take a look at your own individual lives to examine if it really is bad for you and what you should be doing.

For example, while possible job loss is on a lot of minds, examine your own ability to market yourself? No job is guaranteed. If you did lose your job, how quickly can you replace it with a similar income, even if in a different field.

I am in the mortgage business, which clearly is suffering. I don't worry about my home or income, because I know that if needed, I would take two or three jobs (even menial jobs) to always make sure my family has the three most important items: Shelter, food, and clothing. I know I can cut off cable TV, sell cars, cut expenses, and go into survival mode and that I will always be able to provide the basics.

If unemployment is averaging 6%, this means 94% of people are working. If foreclosures are averaging 10% of homes, this means 90% of people are OK. Turn off the TV, stop reading the paper. If you didn't hear and read all the "bad news", how would YOU personally view your situation?

BUYING A HOME: We all need a place to live. Home prices are extremely attractive, with great deals to be found everywhere. Mortgage rates are near historic lows. If you have OK or better credit, can come up with a small down payment, plan on staying in the home for at least four years, you are almost foolish to not buy something TODAY.

MODIFYING YOUR EXISTING LOAN: Many people bought homes they shouldn't have and took risky loans to do so. Simply because a lender said yes, doesn't mean you should have. Even more people who originally bought right used their homes as ATM machines, with a constant "cash out" refinance to pay credit cards and live lifestyles they couldn't afford. I just spoke with a customer who bought this home 15-years ago for $85,000 who is losing it to foreclosure owing $300,000.

As little as two years ago, getting a bank to modify your loan was rare, and required you to be seriously behind in payments. Today, banks are very willing to help keep you in your home by modifying your payments. Workouts vary greatly depending on many variables, but the best ones we see lower your rate to around 3% for 5-years. Then the rates start adjusting back to where they originally were.

Unfortunately, we are seeing two problems emerge with modification. The first, is many people who got loan modifications fairly quickly fall behind again. While no one wants to lose a home, you must be realistic. Many times I speak with people where I calculate a payment based on ZERO percent, and they still tell me they can't make the payment. Modifying only delays the inevitable. Getting out completely and into a situation you can afford releases untold weight off your shoulders.

This brings me to another HUGE problem. Unlicensed loan modification companies have popped up everywhere offering to help you. These companies vary from legitimate low or no fee non-profits, to outright fraud. States across the country have files cease and desist orders, criminal charges, and lawsuits against man. We suggest that if a loan modification is right for you, that you consider working with your bank yourself, or contacting a city, county, or state non-profit homeownership center before paying any upfront or advanced fee to anyone, no matter what they promise.

REFINANCING YOUR EXISTING LOAN: Interest rates are currently hovering near historic lows and it is well worth thinking about getting something better if you qualify. The basic criteria is that if you can lower your rate and you'll be there long enough to at least break even on the closing costs, then it is a smart move.

Today unfortunately, we take many refinance applications, but don't actually close a lot of new loans because of a variety of reasons. The biggest is failing values. A customer of mine bought a home 3-years ago with 20% down. Today's appraised value would put him at 90% loan-to-value. While I can lower his rate 1%, I now have to give him mortgage insurance because he would be over 80%. The mortgage insurance cost completely wipes out the interest rate savings making his payment HIGHER than he is currently. (Wondering what your home is worth today, and what it will appraise for? get a FREE home valuation report)

New credit score requirement and tighter lending guidelines in general also combine to make many refinances harder to come by too.

So, should you be buying a home, modifying your existing loan, refinancing, or running away? It all depends, but I suggest we all stop living in fear, properly analyze our lives and personal situations, take our heads out of the sand, and make well educated decisions to put our lives in a better place.

FED ANNOUNCES they will buy Mortgage Backed Securities

4.5% interest on 30-year fixed???

The FED came out today with a few big announcements.

1) First, they have lowered the FED FUNDS Target rate to 0.00 - 0.25%. This is what many rates, like PRIME, is technically tied to. This is good news for credit cards, home equity loans, etc.

2) The Fed has indicated that they WILL buy Mortgage Backed Securities in an attempt SETTLE down the market. At this time, there are no details. There is no plan, no indications whatsoever who will benefit, no direction as to who may qualify, under what terms and guidelines, and is it just purchase transaction, or refinances too.

3) They indicated they will try to keep rates low for a long long time!

Many people will now be tempted to "hold out" for the "bottom" of the market. THAT IS A BAD MOVE. The key strategy is getting somewhere near the bottom with the right rate and cost combination that works, not hunting and holding out for the exact bottom. No one knows when or where the bottom will be until 6 months after it is gone.

Bottom line: If it makes sense for you to take advantage of TODAY'S real historic rates, DO NOT HESITATE to act NOW.

4.5% interest - don't expect it soon.

As we wrote hear previously, The Fed has indicated that they would like to buy Mortgage Backed Securities in an attempt to trick the market into having lower fixed rates right now. Talk has been of about 4.5%.

The rumors of this action has caused many people to wrongly sit back and wait.

At this time, this plan is little more than talk.

The is no plan, no indications whatsoever that it is ever going to happen, no direction as to who may qualify, under what terms and guidelines, and is it just purchase transaction, or refinances too.

Many of the legislative "savior" actions recently are really thinly veiled jokes. Programs like FHASecure, and Hope for Homeowners, which sounds good in 15-second clips of Rep. Barney Frank praising Congressional action, are in reality, gigantic failures. They help very few people because of all the restrictions to the programs, and the unfunded hope that others (like banks) will participate. The Hope for Homeowners program is so bad, many in the industry have been calling it "Hopeless for Homeowners".

To make it worse

Many lenders are calling people and pretending like 4.5% is coming soon. There are telling people to get their "application started" and to "send in your pay stubs". Clearly these people are not whom you should be making some of the biggest financial decisions of your life with.

Bottom line:

If it makes sense for you to take advantage of TODAY'S real historic rates, DO NOT HESITATE to act NOW.

SPECIAL UPDATE:

4.5% loans for PURCHASING A HOME COMING SOON???

Government officials have been under enormous pressure to help stabilize home prices and prevent foreclosures. At the same time, they don't want to appear to be using taxpayer money to bail out undeserving individuals and institutions. As Fed Chief Bernanke stated, the solution may involve a "full range of coordinated measures" aimed at different aspects of the problem.

The government has already put many programs in place, and others are under discussion. The Fed and the Treasury have used billions of dollars to provide financial institutions with capital to make loans. Last week, they instituted a program to buy MBS to push mortgage rates lower.

Yesterday, the Treasury announced that it is considering a plan which would offer below-market mortgage rates for some loans used to purchase homes. The program being discussed involves the Treasury investing in MBS guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac, which contain purchase money loans at a specified rate (4.5% was the initial proposal).

What we are hearing is that the lower rates will not be available for refinancing loans. So if you are holding out because you've heard 4.5% on the news, you may be missing the current boat, as 30-year rates today are about 5.25% with no discount points TODAY.

How this works requires a little bit of explaining. Typically we see the spread between the 10-year Treasury and a 30-year fixed of about 1.75%. Call this what banks "pay" for their money and their "markup" to the consumer. Based on the market today, the 10-year Treasury is about 2.625%. Add 1.75% to that, and we should be seeing fixed rates about 4.40%.

Lately, because the banks have been under so much financial pressure, the spread has been artificially held higher because the banks are in trouble, and because of the perceived perception of risk of defaults on home loans. The idea then simply behind this proposal is that the government (YOU) will buy mortgage-backed securities with a more traditional 1.75% spread.

Wanna gamble? Go to Vegas!  Real and guaranteed rates in the low 5% range are here right now for refinances for those with good loan-to-value and good credit. Take it and run! Holding out for a little more for most people, when the likelyhood is actually very small of lower rates, just doesn't make sense.

If you are looking to buy a home, a nice home buyer Christmas present "may" be coming. But again, understand that historic rates are HERE TODAY, so GO BUY A HOUSE!

Stay tuned. COME BACK AND READ MY BLOG OFTEN FOR MORE INFORMATION. This could get interesting!

NOTE: This is an informational article, and not an advertisement for credit as defined by paragraph 226.24 of regulation Z. Please call us for a personal rate and APR quote based on your individual situation.

E-loan to exit mortgage business

US-based online lending platform E-loan is to quit the mortgage origination business after posting an $87.4 million net loss in the third quarter.

The company, started in 1997, and a big player in the online mortgage lending business, is operated by Puerto Rica-based Popular Inc and its North American subsidiary Banco Popular, which reported a reported a third-quarter net loss of $139 million.

Popular, Inc. has made the decision that E-LOAN will no longer operate as a direct mortgage lender in 2009.

Employees have been given 60 days' notice of layoff, and that E-Loan will cease operations as of January 9, 2009, according to multiple sources. Some processing staff will remain to close-out existing loans. It is not clear how many employees will be affected.

In a statement, the company said the closing of its US banking operations was a response to the economic downturn. Banco Popular intends to shut down at least 40 branches in its 139-strong national network as it seeks to boost its capital position and clean up its subprime-hit balance sheet.

The closure of the E-loan mortgage book to new business is expected to save $37 million annually. The company says E-loan will continue to service outstanding loans, and offer FDIC-insured certificates of deposits and savings accounts.

In light of the significant changes and challenges in the mortgage industry, the company cut over 500 jobs as part of a restructuring plan in November 2007 in an effort to focus on loans only eligible for repurchase by Fannie Mae and Freddie Mac.

The company has already suspended the acceptance of new "Home Equity" Wholesale loan applications.

Customers who have already obtained loans through E-LOAN will not be affected.

Find out the status of lenders nationwide with the popular website "Mortgage Lender Implode-O-Meter" at http://ml-implode.com

DETAILS OF $7,500 TAX CREDIT Now Available to First-Time Home Buyers:  Learn more at www.JoeMetzler.com 

Not buying a home? Please PASS THIS INFORMATION ALONG TO EVERYONE YOU KNOW WHO MAY BENEFIT

There is no need to fill out an application to qualify for the tax credit. First-time homebuyers merely claim the credit when filing the tax return for that year.

NO PRE-APPROVAL REQUIRED, but if you are relying on this program to purchase a home you may want to check your eligibility.

HERE ARE SOME BASIC FACTS: The credit is available only to first-time home buyers defined as buyers who have not owned a principal residence for three-years prior to the subject purchase. The ownership test applies to both partners in a marriage; i.e. if a husband has not owned a home in the past three years but the wife has, neither spouse qualifies for the first-time home buyer tax credit. (It appears that this would be the case even if the husband is purchasing the property only in his own name.) A buyer can still be eligible for the credit even if he owns a vacation home or rental property not used as a principal residence.

Single taxpayers with "modified adjusted gross income" up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. Individuals and couples with incomes above the thresholds may still qualify for a lesser credit, however, taxpayers with adjusted gross income above $95,000/ $170,000 phase out of the program completely.

Your tax advisor may be able to help you with this. The credit is available even to those with little or no federal income tax liability to offset. This usually means that the government will send a check for part or all of the credit. Otherwise the credit is used to offset any unpaid taxes or increase a refund.

The credit is available for homes purchased between April 9, 2008 and July 1, 2009 and applies to both new and existing homes whether attached or detached, condominiums, mobile homes, or houseboats. A homebuyer contracting for a custom built home can qualify for the credit as long as the home is first occupied between the April 2008/June 2009 dates. (For newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.) The $7,500 credit represents 10 percent of the purchase price of a low cost home.

That the tax credit is not a gift or a grant but essentially a 15 year loan to the homebuyer and, while it is interest free, will require filing a tax return and will carry the same IRS penalties for non-payment as accrue to delinquent taxes. Most who use the program will be able to claim this full amount, however, in the event a home is purchased for a lesser amount, the 10 percent cap will apply. That would mean that a $65,000 purchase would result in a $6,500 credit.

There are other refinements to the program. For example, if it is to his benefit, a taxpayer can apply for the credit in a different year than the home is purchased. There is also a possible forgiveness of debt for homeowners who sell the home before the loan is repaid and do not received sufficient gain from the sale to cover the loan balance.  

Saint Paul, MN: According for Fannie Mae's, own web site, "Fannie Mae is a government-sponsored enterprise (GSE) chartered by Congress with a mission to provide liquidity and stability to the U.S. housing and mortgage markets."

Treasury Secretary Paulson recently spoke about how the takeover (seizure) will increase the availability of mortgage financing.

SOUNDS GREAT. So why are 30-year fixed rate mortgage rate HIGHER than before?

According to many, the reason is investors now have many other places to put their money and still get the safety of the U.S. Government backing.

Prior to all the recent bailout activity of banks, investment , and the likes of AIG, Fannie Mae and Freddie Mac, as Government Sponsored Enterprises (GSE) were one of the only places to get the full faith and credit of the U.S. Government.

This in turn allowed Fannie and Freddie to have very low cost of borrowing money. This allowed THEM to buy mortages from lenders that carried lower rates. All simply because of Fannie and Freddie's dominant market position.

Now that so many of these banking institutions are being guaranteed, or are now partners with the U.S. Government, investors have many new "safe" investment choices.

Another example is the old theory "stocks bad = mortgages good". Historically, as the stock market is dropping, people would pull their money and place it in bonds. Less return, but much safer. This activity into the bond market would push rates down.

As the stock market has recently seen crazy days of 500, 600, 700 point movements, we've seen little, if any of that stock market money move into bonds. Where is it going?

According to Joe Metzler, a Senior Mortgage Banker with Mortgages Unlimited in Saint Paul, MN. "Quick thinking, quick acting by Congress was bound to have unintended consequences. Expect to see Congress forced back to the table a few months down the road to deal this these issues again."

USDA Rural Development ZERO DOWN PAYMENT HOME Loans STILL Available 
We provide these loans in Minnesota and Wisconsin

Rural Development, formerly known as the Farmers Home Administration (FmHA), administers a mortgage loan guaranty program - also called the Section 502 Program -- designed to provide rural home financing for first-time homeowners or those who don't own structurally sound or adequate housing. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare home sites, including providing water and sewage facilities. Prospective borrowers can apply with participating lenders like us, who process and close the loans. The Rural Development organization, an office of the U.S. Department of Agriculture (USDA), underwrites the loan packages.

'Rural' is defined by the organization as being outside a Standard Metropolitan Statistical Area (SMSA). The property that the borrower wishes to buy must be on a publicly-maintained road, though it can be located in a development with private roads. And, as with the mortgage revenue bond authority loan, it must be a single-family owner-occupied home from which no income can be derived. The loan amount can be up to 100% of the lesser of the property's cost or its appraised value. The seller is allowed to pay all closing costs, making it a true 'no money down' transaction for the buyer. Additionally, if the property appraises for more than the purchase price, the borrower can finance in the closing costs and the guaranty fee (which is 2% of the loan). The guaranty fee can be financed as long as the property appraises for at least the amount of the purchase price plus the fee. Anything above that amount can be used to finance closing costs. The maximum loan term under the 502 program is 30 years. (USDA Property Eligibility Check web site)

The program sets limits on the maximum adjusted gross income that a qualified borrower is allowed to have, as well as maximum loan amounts based on the area's current FHA loan limits. Allowable income adjustments include amounts for minor children, child-care expenses, and elderly family members. For the most part, these limitations are not placed so low as to preclude a large segment of moderate-income borrowers from qualifying for the program. Perhaps the most stringent limit of the program, however, is the requirement that the borrower be unable to obtain the financing necessary to buy a home without Rural Development's assistance. In other words, the borrower must be rejected by or be unable to qualify for any other available loan program, such as conventional, FHA, or VA loans. But although unable to qualify for other funding sources, borrowers must still have an OK credit record that shows a history of meeting their financial obligations. 

This program is, in my humble opinion, the best mortgage available to help many areas increase sales, over come the negative effects of the mortgage mess, and truly help buyers and sellers.

Now the Rural Development Home Loan highlights:

1. 100% of sales price up to 102% of APPRAISED value, which may include ALL closing costs and pre paid items and even refund escrow deposit in many cases.

2. NO PMI--- this means lower payments, means more people fit into the debt to income limits

3. It is NOT just for "rural" areas. The agency's (USDA) definition of rural, and what most of us consider rural, are two different things. If you check the maps for your area you'll be delighted in what qualifies as rural.

4. All homes, condos and town homes qualify if there are in a "eligible area".

5. With a 620 score, the buyer needs no explanation for prior derogatory credit nor do they have to pay off collections.

6. There are NOT nearly as many credit "gray" areas as there are in FHA lending.

7. There are NOT any loan limits.

8. Sales concessions are NOT needed in most cases (seller paid closing costs).

We can pre approve buyers in under 15 minutes for this program and close as fast as 10 working days. NOT every bank or broker is able to offer or knows how to do these loans, make sure you deal with an RD Loan expert (like us!).

• Everything you ever wanted to know, the facts not the myths can be found at the USDA web site

• USDA INCOME Eligibility Check

• USDA Property Eligibility Check

Hope this information is helpful.  We would be proud to help you make your home buying dreams come true with a ZERO DOWN USDA Rural Development Loan. Apply Today. Have an answer tomorrow!

BUSH ADMINISTRATION LAUNCHES "HOPE FOR HOMEOWNERS" PROGRAM TO HELP MORE STRUGGLING FAMILIES KEEP THEIR HOMES

WASHINGTON - The Bush Administration today unveiled additional mortgage assistance for homeowners at risk of foreclosure. The HOPE for Homeowners program will refinance mortgages for borrowers who are having difficulty making their payments, but can afford a new loan insured by HUD's Federal Housing Administration (FHA).

"For families struggling to keep up with their mortgage payments, this program will be another resource to refinance into a loan they can afford," said HUD Secretary Steve Preston. "FHA remains a safe and affordable alternative to the high-priced mortgage loans that threaten homeowners' ability to retain their homes. We strongly encourage borrowers to work with their lenders to determine if HOPE for Homeowners is the right program for them."

The HOPE for Homeowners program was authorized by the Economic and Housing Recovery Act of 2008. Since the President signed this vital legislation into law on July 30, 2008, the HOPE for Homeowners Board of Directors has worked diligently to develop and implement the program as directed by Congress. The Board was charged with establishing underwriting standards to ensure borrowers, after any write-down in principal, have a reasonable ability to repay their new FHA-insured mortgage.

The HOPE for Homeowners program begins today and ends September 30, 2011. The program is available only to owner occupants and will offer 30-year fixed rate mortgages - so the borrower's last payment will be the same as the first payment. In many cases, to avoid what would be an even costlier foreclosure, banks will have to write down the existing mortgage to 90 percent of the new appraised value of the home.

Borrower Eligibility

Borrowers are encouraged to contact their lender to determine eligibility, but may be eligible if, among other factors:

• The home is their primary residence, and they have no ownership interest in any other residential property, such as second homes.
  
   
• Their existing mortgage was originated on or before January 1, 2008, and they have made at least six payments.
  
   
• They are not able to pay their existing mortgage without help.
  
   
• As of March 2008, their total monthly mortgage payments due were more than 31 percent of their gross monthly income.
  
   
• They certify they have not been convicted of fraud in the past 10 years, intentionally defaulted on debts, and did not knowingly or willingly provide material false information to obtain their existing mortgage(s).

How the HOPE for Homeowners program works

"HOPE for Homeowners will add to HUD's existing efforts to make FHA refinancing available to homeowners who need it most," said FHA Commissioner Brian D. Montgomery. "One year ago, FHA expanded refinancing into its FHASecure program. Since that time, we have helped more than 360,000 families keep their homes by refinancing with FHA, and we will assist a total of 500,000 families by the end of this year."

The Board expects that the primary way homeowners will participate in the program is by working with their current lender. HOPE for Homeowners will serve as another loss mitigation tool available to distressed borrowers.

HOPE for Homeowners also includes the following provisions:

• The loan amount may not exceed a maximum of $550,440.
  
   
• The new mortgage will be no more than 90 percent of the new appraised value including any financed Upfront Mortgage Insurance Premium.
  
   
• The Upfront Mortgage Insurance Premium is 3 percent and the Annual Mortgage Insurance Premium is 1.5 percent.
  
   
• The holders of existing mortgage liens must waive all prepayment penalties and late payment fees.
  
   
• The existing first mortgage must accept the proceeds of the HOPE for Homeowners loan as full settlement of all outstanding indebtedness.
  
   
• Existing subordinate lenders must release their outstanding mortgage liens.
  
   
• Standard FHA policy regarding closing costs applies, and they may be:
  • Financed into the new loan provided the value of the mortgage (including the Upfront Mortgage Insurance Premium) does not exceed 90 percent of the new appraised value of the home.
  • Paid from the borrowers' own assets.
  • Paid by the servicing lender or third party (e.g., federal, state, or local program).
  • Paid by the originating lender through premium pricing.
  
   
• The borrower must agree to share with FHA both the equity created at the beginning of this new mortgage and any future appreciation in the value of the home.
  
   
• The borrower cannot take out a second mortgage for the first five years of the loan, except under certain circumstances for emergency repairs.

The lender will disclose to the homeowner the benefits of the program including home retention, a new affordable mortgage based on the current appraised value, and 10 percent equity. The lender will also explain the prohibition against new junior liens against the property unless directly related to property maintenance, and a minimum of 50 percent equity and appreciation sharing with the Federal government.

The costs to the homeowner include the upfront and annual insurance premiums, as well as a share of the equity created by the write-down associated with the HOPE for Homeowners mortgage and any future appreciation in the value of the home. At settlement, subordinate lien holders will receive a certificate that evidences their interest as an obligation backed by HUD, with payment conditional on the value of HUD's appreciation share.

If the home is sold or refinanced, the homeowner will share the equity with FHA on a sliding scale ranging from a 100 percent FHA share after the first year to a minimum of 50 percent after five years. The lien holder that previously held the highest priority will receive payment up to a proportion of its original interest, not to exceed the amount of available appreciation. This type of delayed payoff will take place until all prior lien holders are satisfied or the amount of available appreciation is exhausted. All remaining appreciation is remitted to FHA.

The HOPE for Homeowners Board of Directors includes HUD Secretary Steve Preston, Treasury Secretary Henry Paulson, Federal Reserve Board Chairman Ben Bernanke, and FDIC Chairman Sheila Bair. They have named the following people to serve on the board as their designees: FHA Commissioner and Chairman of the Board Brian Montgomery, Federal Reserve Board Governor Elizabeth Duke, Treasury Assistant Secretary for Economic Policy Phillip Swagel, and Federal Deposit Insurance Corporation Director Tom Curry.

Read more about HOPE for Homeowners at www.hud.gov/hopeforhomeowners.

For all your Minnesota Mortgage news, interest rate quotes, programs, FHA, VA, MHFA, visit our full web site at http://joemetzler.com