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Loan Modification - Making Home Affordable |
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For Refinancing Opportunities click HERE
 The Obama Administration unveiled the final details of its "Making
Home Affordable Program," which is designed to help up to 9
million American families refinance or modify their loans to a payment
that is affordable now and into the future.
One of the initiatives in this program is aimed at helping struggling
homeowners "modify" their loans to avoid foreclosure. Here
are some common Questions and Answers about the Modification Initiative
in the program.
MODIFICATION INITIATIVE
Who is eligible?
To apply for a Home Affordable Modification, you must:
- Own and currently occupy a one- to four-unit home.
- Have an unpaid principal balance that is equal to or less than
$729,750 (for one unit properties).
- Have a loan that was originated before January 1, 2009.
- Have a mortgage payment (including taxes, insurance, and home
owners association dues) that is more than 31% of your gross (pre-tax)
monthly income.
- And, have a mortgage payment that is no longer affordable, perhaps
because of a significant change in income or expenses.
If you answered YES to all of these questions, you may be eligible
for the Modification Initiative.
Am I eligible if I missed some mortgage payments?
Yes. If you missed two or more mortgage payments and answered "yes" to
the Modification Initiative requirements above, you may be eligible
for a loan modification.
Do I need to be behind on my mortgage payments to be eligible for a
Home Affordable Modification?
No. Responsible borrowers who are struggling to remain current
on their mortgage payments are eligible if they are at risk of
imminent default. Examples of being "at risk" include
facing a significant increase in your mortgage payment or a reduction
in your income. Contact us 888.9LOAN99 or complete our online
application form to discuss your specific situation.
I have a second mortgage. Am I still eligible?
Yes, but only the first mortgage is eligible for a modification.
I have an FHA loan. Can it be modified under this program? Are all
loans eligible?
Most conventional loans including prime, subprime, and adjustable
loans; loans owned by Fannie Mae and Freddie Mac as well as private
lenders; and loans in mortgage backed securities are eligible for
a modification. Contact me to discuss your specific situation.
I have a mortgage on a duplex. I live in one unit and rent the other.
Will I still be eligible?
Yes. Mortgages on two, three and four unit properties are eligible
as long as you live in one unit as your primary residence.
What does the Modification Initiative do?
If you are eligible for this plan and are approved, you will be put
on a trial modification for three months at a new interest rate and
payment.
If you successfully make the payments and are current at the end
of the three-month trial period, your servicer will execute a permanent
modification agreement that will lower your interest rate to a fixed
rate for five years.
What happens after five years?
Beginning in year six, the rate may increase no more than one
percentage point per year until it reaches the "rate cap" in
your modification agreement, which is basically the market interest
rate on the date the modification is finalized.
That means your rate can never be higher than the market rate on
the day your loan is modified. This is great news because rates are
currently at historic lows... and you can lock in now.
How low can my interest rate go?
Treasury is providing incentives to your investor to write the interest
down as low as 2%, if necessary to get to a payment that you can
afford based on your income.
What happens if that is not enough to get to an affordable payment?
If a 2% interest rate is not enough to bring your payment down to
31% of your gross monthly income, your servicer can extend your payment
term--for example, give you a 40-year loan rather than a 30-year.
If that is still not sufficient your servicer will defer repayment
on a portion of the amount you owe until a later time. This is called
a principal forbearance. A portion of the debt could also be forgiven.
This is optional on the part of the investor. There is no requirement
for principal forgiveness.
Are there any other benefits to this program?
Yes. For every month you make a payment on time, Treasury will pay
an incentive that reduces the principal balance on your loan. Over
five years the total principal reduction could add up to $5,000.
How much will a modification cost me?
There is no cost to borrowers for a Home Affordable Modification.
You will not be asked for any money.
If there are costs associated with the modification--such as payment
of back taxes--your servicer will add those costs on to the amount
you owe. Your servicer will also forgive any late fees.
Is housing counseling required under this program?
Borrowers are strongly encouraged to contact a HUD-approved housing
counselor to help them understand all of their financial options
and to create a workable budget plan.
However, housing counseling is only required for borrowers whose
total monthly debts are very high in relation to their incomes (55%
of your gross monthly income).
If you would like to speak to a housing counselor, call 1-888-995-HOPE
(4673).
How do I apply for the Modification Initiative?
If you meet the general eligibility criteria for the program, you
should gather the following information:
- Recent pay stubs to help determine your gross (before tax) household
income.
- Your most recent income tax return.
- Information about your assets.
- Information about any second mortgage on your house.
- Account balances and minimum monthly payments due on all of your
credit cards.
- Account balances and monthly payments on all other debts, such
as student loans and car loans.
- A letter describing the circumstances that caused your income
to be reduced or expenses to be increased (for example: job loss,
divorce, illness, etc.).
Once you have this information, contact us at your earliest opportunity
and we will make sure that you will be considered for a Home Affordable
Modification.
My loan is scheduled for foreclosure soon. What should
I do?
If your mortgage has been scheduled for foreclosure or if you have
missed one or more mortgage payments, should contact your servicer
immediately.
You may also want contact a HUD-approved housing counselor by calling
1-888-995-HOPE (4673).
As always, if you have any questions or would like to discuss how
this may specifically impact you, I'd be happy to sit down with you. Just call
or email me to set up an appointment 888.9LOAN99 or inoble@GetLowRate.com.
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