Speculate we must let us see who is the first to dip their toes in the water come October 1.
I have had several clients ask about the Hope for Homeowners title in the American Housing Rescue and Foreclosure Prevention Act of 2008, but I have yet to see a Mortgagee Letter from HUD detailing the program. So far just two MLs have been issued from the legislation - one making the moratorium on risk based FHA premiums effective Oct 1, 2008, and the other relating to loss mitigation and partial FHA insurance claims.
My reading of the Act tells me Hope for Homeowners is geared towards loan work-outs. A lender may voluntarily write down the balance to 90% of appraised value to receive FHA insurance on a non-FHA insured loan. You are correct that the rule calls for a minimum housing ratio of 31% to qualify... but all other FHA guidelines apply. That tells me that the total debt ratio can't exceed 43%. Absent a ML, however, all we can do is speculate.
I suspect that your client's lender doubts your client can qualify for FHA insurance which may be why the lender requires a short sale.