Initial equity is equal to the lesser of:
- the appraised value at the time of the H4H loan origination, less the original principal balance on the H4H Mortgage; or
- the outstanding amount due under all existing mortgages, less the original principal balance on the H4H Mortgage.
• During Year 1 – 100 percent
• During Year 2 – 90 percent
• During Year 3 – 80 percent
• During Year 4 – 70 percent
• During Year 5 – 60 percent
• After Year 5 – 50 percent
Example: Appraised value is $200,000, less the original principal balance on the H4H mortgage. The loan-to- value on the H4H mortgage is 90 percent, or $180,000. The equity amount that would be stated in the Exit Premium Mortgages (EPM) is $20,000. If the borrower refinanced during Year 2, $18,000 in initial equity is paid to HUD.
Mortgagees should contact HUD’s Loan Servicing Contractor for questions related to servicing or satisfaction of H4H EPM.
HUD’s Loan Servicing Contractor:
Novad Management Consulting
2401 NW 23rd Street, Suite 1A1
Oklahoma City, OK 73107
Toll-Free Number: (877) 622-8525
Fax Number: (800) 489-1733
- Borrower Inquiries: firstname.lastname@example.org
- Payoff Requests: email@example.com
For policy information see Handbook 4000.1 Section III.A.3.h. at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh