Draft-83I-2502-xxxx REV 1-7-09m

Paperwork Reduction Act Submission

Please read the instruction before completing this form. For additional forms or assistance in completing this forms, contact your agency’s Paperwork Reduction Officer. Send two copies of this form, the collection instrument to be reviewed, the Supporting Statement, and any additional documentation to: Office of Information and Regulatory Affairs, Office of Management and Budget, Docket Library, Room 10102, 725 Seventeenth St. NW, Washington, DC 20503.

1. Agency/Subagency Originating Request: U.S. Department of Housing and Urban Development Office of Housing, Office of Single Family Program Development		2. OMB Control Number: a. 2502-New	b. None      
3. Type of information collection: (check one) New Collection Revision of a currently approved collection Extension of a currently approved collection Reinstatement, without change, of previously approved collection for which approval has expired Reinstatement, with change, of previously approved collection for which approval has expired Existing collection in use without an OMB control number For b-f, note item A2 of Supporting Statement instructions.	4. Type of review requested: (check one) Regular Emergency - Approval requested by 12/31/08 Delegated 5. Small entities: Will this information collection have a significant economic impact on a substantial number of small entities? Yes No 6. Requested expiration date: a. Three years from approval date b. Other (specify) 180 days

7. Title:

Application for HUD/FHA Insured Mortgage “Hope for Homeowners”

8. Agency form number(s): (if applicable)

HUD92900-H4H, HUD92915-H4H, HUD92916-H4H and HUD92917-H4H

9. Keywords:

Housing, Mortgage Credit, HOPE for Homeowners, Appreciation Sharing, Equity Sharing

10. Abstract:

This information is collected on new mortgages offered by FHA approved mortgagees to mortgagors who are at risk of losing their homes to foreclosure. The new FHA insured mortgages refinance the borrowers existing mortgage at a significatnt writedown. Under the program the mortgagors share the new equity and future appreciation with FHA.

11. Affected public: (mark primary with “P” and all others that apply with “X”) a.   Individuals or households e.   Farms b. P Business or other for-profit f.   Federal Government c.   Not-for-profit institutions g.   State, Local or Tribal Government		12. Obligation to respond: (mark primary with “P” and all others that apply with “X”) a.   Voluntary b. P Required to obtain or retain benefits c.   Mandatory
13. Annual reporting and recordkeeping hour burden: a. Number of respondents 8,000 b. Total annual responses 1,266,160 Percentage of these responses collected electronically 7 c. Total annual hours requested 915,040 d. Current OMB inventory 0 e. Difference (+,-) 915,040 f. Explanation of difference: 1. Program change: 915,040 2. Adjustment: 0		14. Annual reporting and recordkeeping cost burden: (in thousands of dollars) Do not include costs based on the hours in item 13. a. Total annualized capital/startup costs b. Total annual costs (O&M) c. Total annualized cost requested d. Current OMB inventory e. Difference f. Explanation of difference: 1. Program change: 2. Adjustment:
15. Purpose of Information collection: (mark primary with “P” and all others that apply with “X”) a. P Application for benefits e.   Program planning or management b.   Program evaluation f.   Research c.   General purpose statistics g. X Regulatory or compliance d. X Audit		16. Frequency of recordkeeping or reporting: (check all that apply) a. Recordkeeping b. Third party disclosure c. Reporting: 1. On occasion 2. Weekly 3. Monthly 4. Quarterly 5. Semi-annually 6. Annually 7. Biennually 8. Other (describe)      
17. Statistical methods: Does this information collection employ statistical methods? Yes No	18. Agency contact: (person who can best answer questions regarding the content of this submission) Name: Stephanie Schader Phone(202) 708-2121

19. Certification for Paperwork Reduction Act Submissions

On behalf of the U.S. Department of Housing and Urban Development, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9.

Note: The text of 5 CFR 1320.9, and the related provisions of 5 CFR 1320/8(b)(3). appear at the end of the instructions. The certification is to be made with reference to those regulatory provisions as set forth in the instructions.

The following is a summary of the topics, regarding the proposed collections of information, that the certification covers:

1. It is necessary for the proper performance of agency functions;

2. It avoids unnecessary duplication;

3. It reduces burden on small entities;

4. It uses plain, coherent, and unambiguous terminology that is understandable to respondents;

5. Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

6. It indicates the retention periods for recordkeeping requirements;

7. It informs respondents of the information called for under 5 CFR 1320.8(b)(3):

1. Why the information is being collected;

2. Use of the information;

3. Burden estimate;

4. Nature of response (voluntary, required for a benefit, or mandatory);

5. Nature and extent of confidentiality; and

6. Need to display currently valid OMB control number;

8. It was developed by an office that has planned and allocated resources for the efficient and effective management and use of the information to collected (see note in item 19 of the instructions);

9. It uses effective and efficient statistical survey methodology; and

10. It makes appropriate use of information technology.

If you are unable to certify compliance with any of these provisions, identify the item below and explain the reason in item 18 of the Supporting Statement.

     

Signature of Program Official: X Michael E. Winiaraski, Deputy Director, Organizational Policy, Planning and Analysis Division, HROA	Date:
Signature of Senior Officer or Designee: Lillian Deitzer, Departmental Reports Management Officer	Date:

Supporting Statement for Paperwork Reduction Act Submissions

Application for HUD/FHA Insured Mortgage “HOPE for Homeowners”

Model HOPE for Homeowners Consumer Disclosure and Certification Form, Model Understanding Key Provisions of Appreciation Sharing, Model Appreciation Sharing Worksheet and Certification, Shared Equity Note and Mortgage, Shared Appreciation Note and Mortgage

A. JUSTIFICATION

1. Why this information is necessary:

The HOPE for Homeowners Act of 2008, located in Title IV of Division A of the Housing and Economic Recovery Act of 2008 (HERA) (Public Law 110-289, 122 Stat. 2654, approved July 30, 2008), amended Title II of the National Housing Act to add a new section 257. New section 257 (12 U.S.C. 1701z-22) established within the Federal Housing Administration (FHA), HOPE for Homeowners, a temporary FHA program that offers homeowners and existing mortgage loan holders (or servicers acting on their behalf) insurance on the refinancing of loans for distressed mortgagors. Regulations published in 24 CFR 4001.01 through 24 CFR 4001.408 detail the requirements pertinent to HUD’s single family mortgage insurance programs, i.e., the eligibility requirements and underwriting procedures, which are determined by the documents included in this clearance package.

“Under the Program, new mortgages are offered by FHA-approved mortgagees to mortgagors who are at risk of losing their homes to foreclosure. The new FHA-insured mortgages refinance the borrower’s existing mortgage at a significant write-down. Eligible borrowers must be unable to afford their existing mortgage payments, must occupy the residence that is the security for the refinanced mortgage as their primary residence, and may not have any present ownership interest in another residence. Investors and investor properties are not eligible for the FHA-insured refinanced mortgages. Under the Program, participating mortgagors share their new equity and future appreciation with FHA. Additionally, participation in this Program is voluntary. No mortgagees, servicers, or investors are compelled to participate.

Section 257 of the NHA prohibits the new mortgage loan insured by FHA from exceeding 96.5 percent of the appraised value of the property that is security for the mortgage, or 132 percent of the dollar amount limitation in effect for 2007 under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C.. 1454(a)(2)) for a property of applicable size. In addition, section 257 also provides that the term of the FHA-insured refinanced mortgage shall have a maturity of not less than 30 years, and must bear a single rate of interest that is fixed for the entire term of the mortgage. Section 257 directs that a mortgagor participating in the Program may not grant a new junior lien on the mortgaged property during the first 5 years of the term of the mortgage insured under the Program, except as the Board may determine is necessary to ensure the maintenance of property standards, and subject to the requirements that any new outstanding liens (1) do not reduce the value of FHA’s equity in the mortgagor’s home; and (2) when combined with the mortgagor’s existing mortgage indebtedness, do not exceed 95 percent of the home’s appraised value at the time of the new junior lien.”

Without the information provided by the forms HUD-92900-A, HOPE for Homeowners Consumer Disclosure and Certification Form, Understanding Key Provisions of Appreciation Sharing, Appreciation Sharing Worksheet and Certification, Shared Equity Note and Mortgage, Shared Appreciation Note and Mortgage, the Board would have difficulty determining eligibility and, consequently, the insurance fund for the single-family mortgage insurance programs would be placed in jeopardy. The existing form HUD 92900-A will be used for the HOPE for Homeowners Lender and Underwriter General Certification. The HOPE for Homeowners Consumer Disclosure and Certification Form will be used by prospective mortgagees to disclose special restrictions of the Program and to obtain the mortgagor’s certification that he/she has not: intentionally defaulted on their existing mortgage or any other debt, been convicted of fraud in the past 10 years, and did not knowingly or willfully furnish material false information for the purpose of obtaining their existing mortgage. The Appreciation Sharing worksheet will be used by the mortgagees to calculate the dollar amount that each subordinate lien holder could receive in the form of an upfront payment, the maximum dollar amount that each subordinate mortgage lien holder could receive from HUD’s share of future appreciation, if any, and obtain the lien holder’s signature acknowledging it has read and accepts the terms of the Appreciation Worksheet and is prepared to execute a full release of its lien in exchange for either an upfront payment or future appreciation share. The Shared Equity Mortgage and Shared Appreciation Mortgage will protect HUD’s interests in the equity and appreciation in the property.

2. How this information will be used:

Lenders obtain information from borrowers in the normal course of business. HUD does not ascribe burden hours to information provided by the borrowers. Lenders report information to FHA for the purpose of obtaining mortgage insurance. The specific items of this information collection are as follows:

1. The underwriter must determine that the borrower’s total monthly mortgage payment on the new H4H loan is less than the borrower’s aggregate total monthly mortgage payment on his or her existing (non-H4H) mortgage(s), including any subordinate mortgage liens, based on a fully-indexed, fully-amortizing PITI payment. Additionally, the lender must determine the borrower’s payment to income ratio on their existing mortgage loan(s) is greater than 31% as of March 2008. These calculations are specific to the H4H program and HUD ascribes burden hours.

2. The underwriter must determine that the payment-to-income and debt-to-income ratios are at, or below, 31 percent and 43 percent, respectively on loans with a loan to value between 90.01 percent and 96.5 percent; and at or below 38 percent and 50 percent, respectively for loans with a maximum loan to value of 90 percent.

3. In addition to standard FHA policies regarding documentation and verification of employment and income, the underwriter must also review income as reported on the transcript of the borrower’s income tax returns or a copy of the borrower’s income tax returns obtained directly from the IRS for the previous two years. It is industry practice to obtain this information on select files, since this will be required in all cases.

4. The Lender and Underwriter must execute the ‘HOPE for Homeowners Certification.’ (HUD 92916-H4H)

5. The file must contain evidence the mortgage being refinanced was originated on/before January 1, 2008. It is industry practice in refinance transactions to obtain information on the existing loan, thus HUD ascribes no burden hours.

6. The lender must provide the ‘HOPE for Homeowners Consumer Disclosure and Certification’, (HUD 92915-H4H) signed and dated by the borrower at the time of initial application and when final documents are executed.

7. The lender must provide the borrower with payoff statements, from the existing lien holders, for his/her review, and request that the borrower notify the originating lender of any discrepancies within 5 days of receipt. It is industry practice to obtain payoffs from existing lien holders, however HUD ascribes burden hours to the borrower notification. This is notification is required as a courtesy to lenders to keep the application processes from being delayed.

8. The lender will calculate the dollar amount that each subordinate mortgage lien holder could receive from HUD’s share of future appreciation on the Shared Appreciation Worksheet. Also, the originating lender will provide the subordinate lien holders with the Shared Appreciation Worksheet, and obtain acknowledgement that they have read and accept the terms of the Appreciation Worksheet and is prepared to execute a full release of its lien in exchange for the appreciation share.

9. Lenders already input several pieces of information into FHA Connection both at the time of case number assignment and endorsement. There are additional data fields for H4H loans. The additional information needed is summarized on the HUD -92900-H4H, an attachment to the underwriting transmittal.

10. The lender will prepare and cause the borrower to execute the Shared Equity Note and Mortgage (SEM) and Shared Appreciation Note and Mortgage (SAM) for the H4H transaction.

11. The lender will record the SEM and SAM with other loan documents, register the H4H security instruments in the Mortgage Electronic Registration System (MERS) as MERS Original Mortgages, and deliver the original SEM and SAM notes and recorded mortgages to HUD’s servicing contractor.

12. Evidence the first payment on the new H4H mortgage was made by the borrower and not by any interested party to the transaction, from the loan proceeds or escrowed at closing.

13. In the event the lender receives a warning that the borrower has been convicted of fraud at the time of case number assignment, and believes it in error, the lender must document to the Homeownership Center that the borrower has not been convicted of fraud.

3. The H4H program and documentation burden sunsets on September 30, 2011. Each application request has its own unique characteristics of property, mortgage amount, and borrower; therefore, the use of computers can only be applied to the storage and retrieval of reference information and not to the burden-reduction aspect. However, data entry on these forms is increasingly generated by proprietary loan origination systems (LOS), if purchased or licensed by the lender, with much of that information provided electronically to HUD. Mortgage lenders may avail themselves of electronic options for data transmissions. In 2005, HUD began accepting case binders electronically. Approximately 7% of all case binders are now submitted in this manner.

3. No duplication exists due to the fact that each application is unique to the eligibility requirements explained in item 2. No similar information exists.

3. The information collected does not have a significant economic impact on a substantial number of small entities.

3. The reporting burden is loan-specific and, thus, cannot be conducted less frequently than on every single loan submitted to FHA for insurance endorsement.

3. Lenders are required to keep records for the duration of the mortgage loan, which could be as long as 30 years. However, the average length of an FHA-insured mortgage is approximately 7.5 years.

3. In accordance with the requirements of 5 CFR 1320.8(d), the Notice soliciting comments on this collection of information was published in the Federal Register on December 16, 2008 (Volume 73, Number 242 page 73672).  (comments)

3. There are no gifts or other type payments made to respondents.

3. The Privacy Act Statement provided in form HUD-92900-A Section III, “Notice to Borrowers” furnishes the authority for the collection of the information requested and the assurance of confidentiality as established by law. Information regarding the borrower's financial status and income data are only used to determine eligibility. The form HUD 92900-A is covered under OMB 2502-0059.

3. This information collection does not contain any questions of a sensitive nature.

3. Estimate of public burden.

Information Collection	Number of Respondents	Frequency of Response	Responses Per Annum	Burden Hour Per Response	Annual Burden Hours	Hourly Cost Per Response	Annual Cost
HOPE for Homeowners Certification	8,000	1 per loan	133,000	1.0	133,000	$36.26	$4,822,580
HOPE for Homeowners Consumer Disclosure and Certification	8,000	1 per loan	133,000	.5	66,500	$36.26	$2,411,290
SEM	8,000	1 per loan	133,000	.25	133,000	$36.26	$1,205,645
SAM	8,000	1 per loan	133,000	.25	133,000	$36.26	$1,205,645
Appreciation Worksheet	8,000	1 per loan	133,000	2.0	266,000	$36.26	$9,645,160
Eligibility Debt to Income ration as of March 2008	8,000	1 per loan	133,000	.50	66,500	$36.26	$2,411,290
Qualifying Debt to Income Ratio	8,000	1 per loan	133,000	.25	33,250	$36.26	$1,205,645
92900-LT	8,000	1 per loan	133,000	.10	13,300	$36.26	$482,258
Obtain tax returns or transcripts from IRS	8,000	1 per loan	133,000	.25	33,250	$36.26	$1,205,645
Provide payoff statements to borrower	8,000	1 per loan	133,000	.25	33,250	$36.26	$1,205,645
Evidence Fraud warning is a false positive	8,000	1 per qualifying loan	2,660	.25	665	$36.26	$24,112.90
Totals	8,000		1,332,660		911,715		$25,824,915.90

Respondents are the FHA approved Mortgagees, whose number totals approximately 8,000.

For the estimates of the cost burden to the public resulting from the collection of information, HUD interviewed lenders from small, medium, and large mortgage companies. HUD spoke with Judith Smith of Judith O. Smith Mortgage Group, Lauri Siebenthall of PrimeLending, Tonia Gustafson of Wells Fargo, Brenda Walker of the Kentucky Housing Corporation, and David Wescott of the Florida Housing Finance Corporation.

For the burden hour estimates, HUD uses the longest estimated time to account for manual process where needed. The one hour estimate for the HOPE for Homeowners certification was derived from information provided by Ms. Gustafson. She noted that the process will require multiple manual processes, including finding, tracking and identifying the original loan.

Ms. Gustafson, Ms. Siebenthall, and Ms. Smith each indicated that the appreciation sharing worksheet would require lenders to explain the H4H loan to subordinate lien holders, who tend to be smaller lenders. It also may necessitate extra discussion time to identify the person within the organization with the proper authority to extinguish the lien.

Ms. Siebenthall indicated that once the additional form requirements were incorporated into their current automated process, the processing of H4H loans would not create a substantial number of additional burden hours for staff.

Additionally, HUD used the Congressional Budget Office estimate that the H4H program will serve 400,000 homeowners over the 3 year period. We used one-third of that total for the annual frequency of response.

3. There are no additional costs to respondents.

3. The annualized cost estimates for the Federal Government are based on a $36.26 per hour costs that is based on a GS-12 staff review.

The cost to the Federal Government relates the review of direct endorsement and lender insurance cases.

Information Collection	Number of Respondents	Frequency of Response	Responses Per Annum	Burden Hour Per Response	Annual Burden Hours	Hourly Cost Per Response	Annual Cost
Case Binder Review	1	75% of loans submitted for insurance	133,000	1.0	99,750	36.26	$3,616.935.00

15. This is a new submission to cover information collection required to meet the statutory and regulatory requirements of the HOPE for Homeowners Program established in Title IV of the Housing and Economic Recovery Act of 2008.

16. This information collection does not include results that will be published.

17. We are not seeking approval to avoid displaying the expiration date of the OMB approval.

18. There are no exceptions to the certification statement identified in item 19 of the OMB 83-I.

B. Collections of Information Employing Statistical Methods

The collection of information does not employ statistical methods.

OMB 83-I 10/95