Home Affordable Loan Modification
Homeowners who are finding it difficult or impossible to keep current with their mortgage soon may be able to modify their primary home loan under a new Home Affordable Modification program passed in February 2009.
Once contracts between lenders and the U.S. Treasury are signed sometime in April, home owners struggling to keep their homes can check online to see if their lender is participating in the program. (see link below.) One of the eligibility requirements is that the borrower’s monthly mortgage payment (including taxes, insurance, and any homeowner association dues) exceeds 31 percent of the borrower’s gross monthly income.
Other eligibility requirements include:
Borrower must occupy property as a primary residence
Property is one-to-four units.
Loan is a first trust deed.
Borrower has experienced a significant change in income or expense to the point that the current mortgage payment is no longer affordable.
Unpaid principal balance is $729,750 or less for one unit (more for multiple units)
Loan was originated before January 1, 2009.
There are several ways lenders can reduce a home owner’s monthly payments under the Home Affordable Modification program. The interest rate can be reduced to as little as 2 percent, the amortization period can be extended to 40 years, the lender can defer (“forebear”) part of the debt until it is due as a balloon payment when the property is sold or refinanced, or the lender can “forgive” a portion of the debt.
Making Home Affordable offers the answers to frequently asked questions about modifying your home loan, refinancing, and additional things you need to know to work through mortgage problems.