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How Do I Apply, loan modification programs.#Loan #modification #programs


How Do I Apply?

There are six agencies throughout the state that administer the program for MRC. Applicants should contact the provider in their region. To find out which provider will handle your inquiry, on the list and find the provider’s contact information on our contact page.

You can contact the provider directly for an application to be sent to you or download the following application: HMLP 2017 Application Loan modification programs . Applications should be sent to the regional provider, who reviews applications and determines initial eligibility. Homeowners hire the designer and/or the contractor of their choice to modify the home. The Provider Agencies can give you resource materials on choosing and hiring architectural, design, and contracting professionals but cannot recommend specific contractors. If you need assistance or reasonable accommodations during your application process, please let your local provider know.

How will applications be evaluated?

Applications are initially reviewed by regional Provider Agencies to determine both income eligibility and eligibility of the proposed modification. Applicants are then contacted by the Provider Agency and asked to provide additional information including, but not limited to: income, a professional’s certification that the modification relates to the individual’s functional need, and home modification plans, if available. Income verification will be requested in the form of photocopies of earning statements, tax returns, benefit confirmation and/or pay stubs. Applicants who show total household income in excess of 200% of HMLP income guidelines are not eligible.

If the income and proposed modifications meet HMLP guidelines for eligibility, the Provider Agency will then schedule an initial inspection of the property. This inspection will be conducted by a construction monitor, who will review the bid proposal and verify that the scope of work meets program guidelines.

If the application is determined eligible, the applicant will be notified by the Provider Agency by phone and can expect a Commitment Letter to follow which will include:

  • The type of loan for which the applicant is eligible, including rate and terms;
  • The amount of the loan, based on the estimated cost of the modification; and
  • Notification that the final loan amount will include the proposed costs of the work performed, plus other Property Owner/Borrowers fees, i.e. origination fees, closing costs, permitting fees, etc.

If the applicant is not eligible for the Program, you will be notified by the Provider Agency in writing. The Provider Agency will attempt to provide you with appropriate referrals to other programs or sources of funding for which you may be eligible. Some information on other programs can be found on our Resources and Links page.


What – s the difference between a loan modification, forbearance agreement, and repayment plan, loan modification programs.#Loan #modification #programs


What s the difference between a loan modification, forbearance agreement, and repayment plan?

Loan modifications, forbearance agreements, and repayment plans are different ways that borrowers can avoid foreclosure. Read on to learn the difference between these options and how they can help you if you are having trouble making your mortgage payments.

A loan modification is a permanent restructuring of the mortgage where one or more of the terms of a borrower’s loan are changed to provide a more affordable payment. With a loan modification, the lender may agree to do one of more of the following to reduce your monthly payment:

  • reduce the interest rate
  • convert from a variable interest rate to a fixed interest rate, or
  • extend of the length of the term of the loan.

Generally, to be eligible for a loan modification, you must:

  • show that you cannot make your current mortgage payment due to a financial hardship
  • complete a trial period to demonstrate you can afford the new monthly amount, and
  • provide all required documentation to the lender for evaluation.

Required documentation will likely include:

  • a financial statement
  • proof of income
  • most recent tax returns
  • bank statements, and
  • a hardship statement.

There are many different loan modification programs available, including proprietary (in-house) loan modifications, as well as the Fannie Mae and Freddie Mac Flex Modification program.

If you are currently unable to afford your mortgage payment, and won t be able to in the near future, a loan modification may be the ideal option to help you avoid foreclosure.

Forbearance Agreements

While a loan modification agreement is a permanent solution to unaffordable monthly payments, a forbearance agreement provides short-term relief for borrowers. With a forbearance agreement, the lender agrees to reduce or suspend mortgage payments for a certain period of time and not to initiate a foreclosure during the forbearance period. In exchange, the borrower must resume the full payment at the end of the forbearance period, plus pay an additional amount to get current on the missed payments, including principal, interest, taxes, and insurance. (The specific terms of a forbearance agreement will vary from lender to lender.)

If a temporary hardship causes you to fall behind in your mortgage payments, a forbearance agreement may allow you to avoid foreclosure until your situation gets better. In some cases, the lender may be able to extend the forbearance period if your hardship is not resolved by the end of the forbearance period to accommodate your situation.

In forbearance agreement, unlike a repayment plan, the lender agrees in advance for you to miss or reduce your payments for a set period of time.

Repayment Plans

If you ve missed some of your mortgage payments due to a temporary hardship, a repayment plan may provide a way to catch up once your finances are back in order. A repayment plan is an agreement to spread the past due amount over a specific period of time.

Here s how a repayment plan works:

  • The lender spreads your overdue amount over a certain number of months.
  • During the repayment period, a portion of the overdue amount is added to each of your regular mortgage payments.
  • At the end of the repayment period, you will be current on your mortgage payments and resume paying your normal monthly payment amount.

This option lets you pay off the delinquency over a period of time. The length of a repayment plan will vary depending on the amount past due and on how much you can afford to pay each month, among other things. A three- to six-month repayment period is typical.

To get information about these and other options to avoid foreclosure, see our Alternatives to Foreclosure area.


What – s the difference between a loan modification, forbearance agreement, and repayment plan, loan modification programs.#Loan #modification #programs


What s the difference between a loan modification, forbearance agreement, and repayment plan?

Loan modifications, forbearance agreements, and repayment plans are different ways that borrowers can avoid foreclosure. Read on to learn the difference between these options and how they can help you if you are having trouble making your mortgage payments.

A loan modification is a permanent restructuring of the mortgage where one or more of the terms of a borrower’s loan are changed to provide a more affordable payment. With a loan modification, the lender may agree to do one of more of the following to reduce your monthly payment:

  • reduce the interest rate
  • convert from a variable interest rate to a fixed interest rate, or
  • extend of the length of the term of the loan.

Generally, to be eligible for a loan modification, you must:

  • show that you cannot make your current mortgage payment due to a financial hardship
  • complete a trial period to demonstrate you can afford the new monthly amount, and
  • provide all required documentation to the lender for evaluation.

Required documentation will likely include:

  • a financial statement
  • proof of income
  • most recent tax returns
  • bank statements, and
  • a hardship statement.

There are many different loan modification programs available, including proprietary (in-house) loan modifications, as well as the Fannie Mae and Freddie Mac Flex Modification program.

If you are currently unable to afford your mortgage payment, and won t be able to in the near future, a loan modification may be the ideal option to help you avoid foreclosure.

Forbearance Agreements

While a loan modification agreement is a permanent solution to unaffordable monthly payments, a forbearance agreement provides short-term relief for borrowers. With a forbearance agreement, the lender agrees to reduce or suspend mortgage payments for a certain period of time and not to initiate a foreclosure during the forbearance period. In exchange, the borrower must resume the full payment at the end of the forbearance period, plus pay an additional amount to get current on the missed payments, including principal, interest, taxes, and insurance. (The specific terms of a forbearance agreement will vary from lender to lender.)

If a temporary hardship causes you to fall behind in your mortgage payments, a forbearance agreement may allow you to avoid foreclosure until your situation gets better. In some cases, the lender may be able to extend the forbearance period if your hardship is not resolved by the end of the forbearance period to accommodate your situation.

In forbearance agreement, unlike a repayment plan, the lender agrees in advance for you to miss or reduce your payments for a set period of time.

Repayment Plans

If you ve missed some of your mortgage payments due to a temporary hardship, a repayment plan may provide a way to catch up once your finances are back in order. A repayment plan is an agreement to spread the past due amount over a specific period of time.

Here s how a repayment plan works:

  • The lender spreads your overdue amount over a certain number of months.
  • During the repayment period, a portion of the overdue amount is added to each of your regular mortgage payments.
  • At the end of the repayment period, you will be current on your mortgage payments and resume paying your normal monthly payment amount.

This option lets you pay off the delinquency over a period of time. The length of a repayment plan will vary depending on the amount past due and on how much you can afford to pay each month, among other things. A three- to six-month repayment period is typical.

To get information about these and other options to avoid foreclosure, see our Alternatives to Foreclosure area.


How Do I Apply, loan modification programs.#Loan #modification #programs


How Do I Apply?

There are six agencies throughout the state that administer the program for MRC. Applicants should contact the provider in their region. To find out which provider will handle your inquiry, on the list and find the provider’s contact information on our contact page.

You can contact the provider directly for an application to be sent to you or download the following application: HMLP 2017 Application Loan modification programs . Applications should be sent to the regional provider, who reviews applications and determines initial eligibility. Homeowners hire the designer and/or the contractor of their choice to modify the home. The Provider Agencies can give you resource materials on choosing and hiring architectural, design, and contracting professionals but cannot recommend specific contractors. If you need assistance or reasonable accommodations during your application process, please let your local provider know.

How will applications be evaluated?

Applications are initially reviewed by regional Provider Agencies to determine both income eligibility and eligibility of the proposed modification. Applicants are then contacted by the Provider Agency and asked to provide additional information including, but not limited to: income, a professional’s certification that the modification relates to the individual’s functional need, and home modification plans, if available. Income verification will be requested in the form of photocopies of earning statements, tax returns, benefit confirmation and/or pay stubs. Applicants who show total household income in excess of 200% of HMLP income guidelines are not eligible.

If the income and proposed modifications meet HMLP guidelines for eligibility, the Provider Agency will then schedule an initial inspection of the property. This inspection will be conducted by a construction monitor, who will review the bid proposal and verify that the scope of work meets program guidelines.

If the application is determined eligible, the applicant will be notified by the Provider Agency by phone and can expect a Commitment Letter to follow which will include:

  • The type of loan for which the applicant is eligible, including rate and terms;
  • The amount of the loan, based on the estimated cost of the modification; and
  • Notification that the final loan amount will include the proposed costs of the work performed, plus other Property Owner/Borrowers fees, i.e. origination fees, closing costs, permitting fees, etc.

If the applicant is not eligible for the Program, you will be notified by the Provider Agency in writing. The Provider Agency will attempt to provide you with appropriate referrals to other programs or sources of funding for which you may be eligible. Some information on other programs can be found on our Resources and Links page.


Types of Mortgage Loans and Home Loan Programs, The Truth About, loan modification programs.#Loan #modification #programs


Loan Types and Programs

Loan modification programs

There are an infinite number of loan types out there, and lenders are constantly coming up with creative ways to wrangle in new homeowners. The type of home loan you choose can make or break you as a borrower, so make sure you fully understand it before making any kind of commitment.

These days you ll probably come across ridiculous loan programs that seemingly allow anyone to qualify for a home loan. There are 1% start rate loans, often referred to as neg-ams or pick-a-payment programs, and 40-yr and 50-yr loans that stretch the mortgage payment out over what seems like a lifetime.

Most prospective homeowners these days seem to be interested in 100% financing, generally because they have don t have the assets necessary for a down payment. Unfortunately, the proliferation of these types of home loan programs have increased the number of high-risk borrowers in the United States at an alarming rate.

That may explain the surge in mortgage defaults and foreclosures over the past several years.

But if you take the time to educate yourself on the many home loan types out there, you ll effectively decrease your chances of defaulting on your mortgage. That said, let s talk about the many different loan types and programs available today.

Before getting into specific loan programs, I want to highlight the types of loans available to potential homeowners.

Conforming Loans and Non-Conforming Loans

One way home loans are differentiated is by their GSE eligibility. If the loan meets requirements set forth by Fannie Mae and Freddie Mac, it is considered a conforming loan. If the loan doesn s meet all the underwriting requirements set forth by the pair of GSEs, it is considered non-conforming.

One of the main guidelines that determines whether a mortgage is conforming or not is loan amount. Generally, a mortgage with a loan amount below $417,000 is considered conforming, whereas any loan amount above $417,000 is considered a jumbo loan. However, in Alaska and Hawaii the confirming limit is $625,500.Note that the conforming limit may change annually, and has risen quite a bit in the past few years as housing prices skyrocketed.

A jumbo loan may meet all of Fannie Mae and Freddie Mac’s loan underwriting guidelines, but if the loan amount exceeds the conforming limit, it will be considered non-conforming and carry a higher mortgage rate as a result.

If your loan amount is on the fringe of the conforming limit, sometimes simply dropping your loan amount a few thousand dollars can lower your mortgage rate tremendously, so keep this in mind anytime your loan amount is near the limit.

Conventional Loans and Government Loans

Mortgages are also classified as either conventional loans or government loans. Conventional loans can be conforming or jumbo, but are not insured or guaranteed by the government.

Then there are government loans, such as the widely popular FHA loan. This type of mortgage is backed by the Federal Housing Administration (FHA). Another common government loan is the VA loan, backed by the Department of Veteran Affairs. The max loan amount for these types of loans varies by county. There s even a USDA home loan backed by the same folks that grade steaks!

Now that you know a bit about different home loan types, we can focus on home loan programs. As I mentioned earlier, there are a ton of different loan programs out there, and more seem to surface everyday. Let s start with the most basic of loan programs, the 30-year fixed-rate loan.

The 30-year fixed loan is as simple as they come. Most mortgages are based on a 30-year amortization, and the 30-year fixed is no different.

The 30-year fixed loan is just how it sounds, a loan with a 30-year term that is fixed for 30 years. What this is means is that the loan will take 30 years to pay off, and the rate will stay fixed during those entire 30 years. There isn t much else to it.

Let s say you secure a rate of 6.5% on a 30-year fixed loan with a loan amount of $500,000. You ll have monthly mortgage payments of $3160.34 for a total of 360 months, or 30 years. You will be required to pay the same amount each month until the loan is paid off. So the total amount you would pay on a $500,000 loan at 6.5% over 30 years would be $1,137,722.40.

Total Interest Paid over Life of Loan: $637,722.44

Interest Paid in 2006: $32,335.45

Interest Paid in 2007: $31,961.17

Average Monthly Interest Paid over Life of Loan: $1,771.45

You will also need to pay taxes and insurance on top of this mortgage payment, so keep that in mind when figuring out how much house you can afford.

This sounds steep, but most people don t stay in a 30-year loan for 30 years. They either pay it down quicker by making higher monthly payments (biweekly mortgage payments), or they may sell or refinance the loan.

Another common and simple to understand loan is the 15-year fixed loan. This works exactly like the 30-year loan except the same fixed payment is made in half the time, 180 months or 15 years. Obviously the payment will be much higher, but you will pay less interest and gain more home equity in a shorter amount of time. People who have an ample amount of income usually prefer this type of loan to reduce the overall cost of financing a mortgage.

This is how it breaks down:

Total Interest Paid over Life of Loan: $283,996.63

Interest Paid in 2006: $31,900.36

Interest Paid in 2007: $30,536.41

Average Monthly Interest Paid over Life of Loan: $1,577.76

The monthly payment is significantly higher, but the amount of total interest paid over the life of the loan is much less. Because you re putting more money towards the equity of the home, you paying less interest each month, which you ll see as the $1.577.76 figure as compared to the $1,771.45 you d pay on a 30yr fixed loan. That s nearly $200 a month that you would save in interest charges by electing to take a 15-year fixed mortgage.

Although the monthly payment is markedly higher than the 30 year fixed mortgage, the total interest paid during the 15 year loan is substantially lower. It may seem like the obvious choice, but it s more complicated if you factor in tax deductions and the power of leverage. Not to mention if you can afford a monthly mortgage payment that high.

Learn about other types of mortgage programs including:


How Do I Apply, loan modification programs.#Loan #modification #programs


How Do I Apply?

There are six agencies throughout the state that administer the program for MRC. Applicants should contact the provider in their region. To find out which provider will handle your inquiry, on the list and find the provider’s contact information on our contact page.

You can contact the provider directly for an application to be sent to you or download the following application: HMLP 2017 Application Loan modification programs . Applications should be sent to the regional provider, who reviews applications and determines initial eligibility. Homeowners hire the designer and/or the contractor of their choice to modify the home. The Provider Agencies can give you resource materials on choosing and hiring architectural, design, and contracting professionals but cannot recommend specific contractors. If you need assistance or reasonable accommodations during your application process, please let your local provider know.

How will applications be evaluated?

Applications are initially reviewed by regional Provider Agencies to determine both income eligibility and eligibility of the proposed modification. Applicants are then contacted by the Provider Agency and asked to provide additional information including, but not limited to: income, a professional’s certification that the modification relates to the individual’s functional need, and home modification plans, if available. Income verification will be requested in the form of photocopies of earning statements, tax returns, benefit confirmation and/or pay stubs. Applicants who show total household income in excess of 200% of HMLP income guidelines are not eligible.

If the income and proposed modifications meet HMLP guidelines for eligibility, the Provider Agency will then schedule an initial inspection of the property. This inspection will be conducted by a construction monitor, who will review the bid proposal and verify that the scope of work meets program guidelines.

If the application is determined eligible, the applicant will be notified by the Provider Agency by phone and can expect a Commitment Letter to follow which will include:

  • The type of loan for which the applicant is eligible, including rate and terms;
  • The amount of the loan, based on the estimated cost of the modification; and
  • Notification that the final loan amount will include the proposed costs of the work performed, plus other Property Owner/Borrowers fees, i.e. origination fees, closing costs, permitting fees, etc.

If the applicant is not eligible for the Program, you will be notified by the Provider Agency in writing. The Provider Agency will attempt to provide you with appropriate referrals to other programs or sources of funding for which you may be eligible. Some information on other programs can be found on our Resources and Links page.


What – s the difference between a loan modification, forbearance agreement, and repayment plan, loan modification programs.#Loan #modification #programs


What s the difference between a loan modification, forbearance agreement, and repayment plan?

Loan modifications, forbearance agreements, and repayment plans are different ways that borrowers can avoid foreclosure. Read on to learn the difference between these options and how they can help you if you are having trouble making your mortgage payments.

A loan modification is a permanent restructuring of the mortgage where one or more of the terms of a borrower’s loan are changed to provide a more affordable payment. With a loan modification, the lender may agree to do one of more of the following to reduce your monthly payment:

  • reduce the interest rate
  • convert from a variable interest rate to a fixed interest rate, or
  • extend of the length of the term of the loan.

Generally, to be eligible for a loan modification, you must:

  • show that you cannot make your current mortgage payment due to a financial hardship
  • complete a trial period to demonstrate you can afford the new monthly amount, and
  • provide all required documentation to the lender for evaluation.

Required documentation will likely include:

  • a financial statement
  • proof of income
  • most recent tax returns
  • bank statements, and
  • a hardship statement.

There are many different loan modification programs available, including proprietary (in-house) loan modifications, as well as the Fannie Mae and Freddie Mac Flex Modification program.

If you are currently unable to afford your mortgage payment, and won t be able to in the near future, a loan modification may be the ideal option to help you avoid foreclosure.

Forbearance Agreements

While a loan modification agreement is a permanent solution to unaffordable monthly payments, a forbearance agreement provides short-term relief for borrowers. With a forbearance agreement, the lender agrees to reduce or suspend mortgage payments for a certain period of time and not to initiate a foreclosure during the forbearance period. In exchange, the borrower must resume the full payment at the end of the forbearance period, plus pay an additional amount to get current on the missed payments, including principal, interest, taxes, and insurance. (The specific terms of a forbearance agreement will vary from lender to lender.)

If a temporary hardship causes you to fall behind in your mortgage payments, a forbearance agreement may allow you to avoid foreclosure until your situation gets better. In some cases, the lender may be able to extend the forbearance period if your hardship is not resolved by the end of the forbearance period to accommodate your situation.

In forbearance agreement, unlike a repayment plan, the lender agrees in advance for you to miss or reduce your payments for a set period of time.

Repayment Plans

If you ve missed some of your mortgage payments due to a temporary hardship, a repayment plan may provide a way to catch up once your finances are back in order. A repayment plan is an agreement to spread the past due amount over a specific period of time.

Here s how a repayment plan works:

  • The lender spreads your overdue amount over a certain number of months.
  • During the repayment period, a portion of the overdue amount is added to each of your regular mortgage payments.
  • At the end of the repayment period, you will be current on your mortgage payments and resume paying your normal monthly payment amount.

This option lets you pay off the delinquency over a period of time. The length of a repayment plan will vary depending on the amount past due and on how much you can afford to pay each month, among other things. A three- to six-month repayment period is typical.

To get information about these and other options to avoid foreclosure, see our Alternatives to Foreclosure area.


Loan Modification Programs: How to Qualify and Apply #fha #loan #rate


#home loan modification
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Understanding the qualifications and how to get started

In order to avoid foreclosure, your lender may agree to modify some or all of the terms of your loan. A loan modification is a negotiation between you and your lender. It begins by contacting your mortgage company, discussing your problem, and proposing a solution that involves modifying the loan.

How Government Loan Modification Programs Work

The purpose of a mortgage modification is to get your monthly payment to a more affordable level. An affordable mortgage payment is typically defined as 31% of the borrower s monthly gross income. So for example, if you earn $4,200 a month, then your loan will be modified to be 31% of your income, or $1,302 per month in this case.

The federal government and the Department of Housing and Urban Development (HUD) have created and recently updated several loan modification programs for a person s primary residence.

Home Affordable Modification Plan (HAMP)

The Obama Administration introduced HAMP as part of the Making Home Affordable plan to stabilize the housing market. Under the federal loan modification plan, your monthly loan payments are reduced by modifying one or more components of your mortgage:

  • Lower the interest rate
  • Extend the life of the loan
  • Lower the loan principle

How to Qualify

Loan Modification Evaluator Interactive tool determines how likely you are to qualify for a loan modification and evaluates your mortgage options. Start the Modification Evaluator

Personal qualifications

As long as you can verify a legitimate financial hardship that impacts your ability to make your loan payments, you may qualify. Contrary to popular belief, you do not need to be behind on your payments before a lender will consider doing a loan modification with you. If you are behind on your payment or facing foreclosure, applying for a loan modification places a temporary halt on the foreclosure process.

Mortgage qualifications

In order for your loan to qualify for modification under HAMP, the following conditions must apply:

  • You obtained your mortgage on or before January 1, 2009.
  • You owe up to $729,750 on your primary residence or single unit rental property.
  • You owe up to $934,200 on a 2-unit rental property; $1,129,250 on a 3-unit rental property; or $1,403,400 on a 4-unit rental property.
  • The property has not been condemned.
  • You have a financial hardship and are either delinquent or in danger of falling behind on your mortgage payments (non-owner occupants must be delinquent in order to qualify).
  • You have sufficient, documented income to support a modified payment.
  • You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

What if I don t qualify or have been denied?

Unfortunately not all struggling homeowners qualify for the government modification program. Springboard, a HUD-approved housing counseling agency, has developed three programs to help homeowners who have been denied or do not qualify for this federal program:

  • The Home Affordable Foreclosure Alternatives (HAFA) Program   Government assistance for a short sale or deed-in-lieu of foreclosure

Other Loan Mod Programs

  • VA Loan   If your home mortgage is a Veterans Administration (VA) loan, then there is a specific government program called the Cal Vet Modification .
  • FHA Loan   There is a loan modification program specifically for Federal Housing Administration (FHA) loans
  • None of the Above   Banks who do not participate in the government programs may have their own unpublished loan modification programs with a different set of qualifications.

How to Apply for a Loan Modification 3 Simple Steps

If you are currently facing a financial hardship and want a loan modification, then know that time is of the essence. You have a greater ability to negotiate with your lender earlier on in the foreclosure process than later. Get started today:

  1. Collect Your Financial Information

You ll need to provide your current income and expenses.

  • Collect Your Mortgage Information
    Get a copy of your mortgage statement that has your loan number on it.
  • CALL

    If you re ready to begin negotiating for a loan modification, get some free advice before contacting your lender. Talk to a nonprofit housing consultant from a HUD-approved agency and find out how likely you are to qualify for a loan modification based on your individual mortgage and financial situation.

  • Nonprofit housing consultants from a HUD-approved agency can provide you with:

    • All available loan modification options
    • A customized action plan
    • Budget suggestions
    • Help in negotiating with your lender

    Loan Modification Programs #loan #for #people #with #bad #credit


    #loan modification program
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    Loan Modification Programs

    Since the mortgage crisis took flight, “loan modification programs” have become all the rage.  Instead of originating new loans, former mortgage brokers and loan officers are shifting focus to reworking outstanding loans that have fallen behind in payments or are in danger of doing so.  Ironically, many are getting paid to reverse the damage they caused to begin with.

    In the past couple years, millions of borrowers have fallen behind on their monthly mortgage payments, creating an unprecedented foreclosure epidemic. And because home prices are falling, many are seeing their home equity sucked dry or even worse, finding themselves underwater on their mortgages.

    This environment has forced banks and mortgage lenders to begin modifying loans in an effort to recoup losses and prevent foreclosures, which puts even more downward pressure on home prices.  Things have become so dire that a number of banks have initiated their own streamlined loan modification programs to complement their standard loss mitigation efforts.

    There are also foreclosure prevention coalitions, such as Hope Now, which provide free assistance to struggling homeowners through a streamlined process using existing loss mitigation tools.

    So now that we have a little background, let’s take a look at some of the most common loan modification options available to at-risk borrowers.

    Repayment Plan

    A repayment plan is one the most simple and typically most common loan workout options available to borrowers in arrears (behind on payments).  It’s not really considered a loan modification, because the terms of the loan are essentially unchanged.  Basically, the bank or lender will agree to take your delinquent payments and add them to your current monthly payments until you become current again.  So if you owe say $4,000 in arrearage, they may add $500 to your monthly payment for eight months until you’re back on track.

    Critics have panned repayment plans because they fail to address the affordability issues tied to delinquent loans.  Because the debt is simply redistributed, borrowers who can’t afford the terms of their loan will likely re-default within months of receiving a repayment plan, especially as the monthly payment increases as a result.

    Interest Rate Reduction

    A more favorable loan modification is one that involves an interest rate reduction, so the monthly payment is actually made more affordable.  In this case, the loan will be re-underwritten to determine what size of payment you would qualify for at a given debt-to-income ratio. generally around 38 percent.

    The interest rate may be temporarily lowered, for a period of say five years, and then steadily increase, to the market rate at the time of modification, or it could be fixed for life.  This is clearly a favorable option, as it cuts the borrower’s monthly payments for good.

    Extended Amortization

    Another relatively easy ways for banks and lenders to increase affordability and reduce monthly mortgage payments is to extend the amortization of the loan .  Instead of a standard 30-year amortization period, the loan may be stretched another 10 years, pushing payments to a more acceptable level for the borrower.

    Principal Reduction

    While banks and lenders aren’t generally keen to offer principal reductions, it’s becoming increasingly common as desperation grows.  Since so many borrowers are underwater, banks have little choice but to reduce the balance of the existing mortgage to put the borrower in a positive equity position.  However, there are strings attached.  In exchange for a principal reduction, some banks want a piece of the future appreciation, assuming there is any.  This has created a huge hurdle, as no one can agree on what’s fair.

    Partial Claim

    This method, which is only available for FHA loans. creates an interest-free second mortgage that contains up to 12 months of accrued mortgage payments.  It brings your account up to date immediately, and must be paid off when the first mortgage is paid off or the property sold.

    Fannie Mae HomeSaver Advance

    HomeSaver Advance is an unsecured personal loan, used to cure delinquency on the first mortgage.  It’s a 15-year fixed-rate loan at five percent with no interest accrual or payments for the initial six months.  The loan amount can be as much as $15,000, or 15 percent of the unpaid principal balance.  Proceeds are applied to delinquent payments, interest, taxes, insurance, escrow advances or foreclosure/bankruptcy-related fees.  No cash received in-hand.

    Keep in mind that banks, lenders, and housing counseling agencies may use any combination of the above approaches to get monthly mortgage payments to acceptable levels.  For instance, it may take both extended amortization and a reduced interest rate to qualify a distressed borrower, or even principal reductions.

    Also understand that some borrowers may be beyond help, as some loans underwritten over the past few years were riddled with fraud and should have never been extended to the borrowers to begin with, so foreclosure is inevitable for many.  Keep your eyes and ears open, as new loan modification programs are popping up all the time.  Make sure you contact your loan servicer or lender immediately if you need assistance.

    One final note watch out for loan modification scams, which seem to be growing in prevalence as the situation worsens.  Many so-called assistance programs simply create a middleman who will charge you more fees and possibly put in you a more dire position.


    Federal Loan Modification Programs #simple #interest #loan #calculator


    #loan modification program
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    12. Federal Loan Modification Programs

    Submitted by Anonymous (not verified) on November 23, 2009

    This chapter covers Federal Housing Administration (FHA) and Veterans Administration (VA) mortgage modification programs. The programs may or may not be restricted to FHA or VA loans. For other federal mortgage loan modification programs, in particular those offered through Fannie Mae and Freddie Mac, please see the following chapter of this guide.

    Understanding Federal Loan Modification Programs

    There are a variety of mortgage loan modification programs available at the federal level to assist homeowners who are looking to have their mortgages modified. Guidelines are outlined here, and borrowers looking to find more specific information should contact either any of the agencies listed here, or a mortgage professional.

    HUD/FHA

    The Federal Housing Administration (FHA) has two mortgage modification programs. They are FHA Secure, and Hope for Homeowners

    FHA Secure

    FHA Secure is a program for mortgage holders who have Adjustable Rate Mortgages that have reset to a higher rate, putting their mortgage payment out of reach for them. Borrowers may apply for the program while they are in default.

    Borrowers who qualify can be refinanced into a fixed-rate mortgage with a payment they can afford. The borrower must demonstrate that they were able to make their mortgage payments prior to the rate adjustment, and defaulted only after the reset.

    The FHA will charge an upfront premium at the time the loan is taken out, as they do with all borrowers (This premium is financeable). Then, based on the credit profile, they will also charge a monthly insurance premium.

    Hope for Homeowners (FHA)

    Hope for Homeowners is another FHA-based program. It offers incentives for lenders to reduce the principal on a mortgage where the value of a property has declined to less than the balanced owed, in return for refinancing into an FHA-insured mortgage. Congress modified the program in May 2009 to make it more attractive to lenders after only a handful of borrowers received assistance in the first seven months of the program. The requirements are:

    • The property on which the mortgage to be modified must be the primary residence of the borrower. That property must be the only property that the borrower owns, meaning they have no second home or investment properties.
    • The mortgage must have been taken out before January 1, 2008, and the borrower must have made at least six payments on that mortgage.
    • The borrower must be able to demonstrate that they are unable to pay the mortgage without some type of assistance.
    • The borrower, when they took out the mortgage, must have had a mortgage debt ratio of 31 percent or less. This means, for example, that if their gross monthly income was $5,000, the payment, including, taxes and insurance was no more than $1,550 ($5,000 x 31 percent).
    • Borrowers must certify that they have no fraud convictions in the last 10 years, and that the information that they provided on their original loan application, including income, was correct.

    Partial Claim

    This is specifically for FHA-insured loans, and is for borrowers who are at least four months delinquent on the property where they live. The lender advances part or all of the past-due payments and fees to the borrower in the form of a zero-interest subordinate mortgage. This “partial claim” is then added on to the end of the mortgage, or becomes due when the property is either sold or refinanced.

    The borrower must be able to document the hardship that caused them to miss the payments. They must also be able to prove that they are now capable of making the full mortgage payment, and are unable to make up the missed payments and fees.

    Veteran’s Administration (VA)

    Veteran’s Administration loans are a bit different in terms of modification than either conventional loans (Fannie and Freddie) or FHA loans, as the VA has no broad loan modification program, as do the other three agencies.

    This means that borrowers should call their specific lender and ask for a VA Loan Modification Package. This will describe what their particular lender is looking for, and what terms they are able to offer.

    In some cases, if a modification cannot be worked out, the Veterans Administration will buy back the loan. Borrowers should check with their mortgage professional for details.

    While VA borrowers are inquiring about a modification, they should also ask to see if they qualify for a VA Streamline Refinance, which may help to bypass the modification process. A streamline refinance can, unlike a loan modification, can be done by any lender offering VA loans.