Mortgage Loan Modification Programs
If you’re struggling to make your home loan payments you may
be eligible for a loan modification. Here are some mortgage
loan modification programs that are available today.
Homeowners having trouble making their mortgage payments may qualify for one of several government
mortgage loan modification programs. Even if you meet the criteria, the lender still decides whether to
modify your loan.
Hope for Homeowners
The Hope for Homeowners program provides homeowners with a new 30-year, fixed rate FHA-insured
mortgage. Homeowners refinance their current mortgage with the new loan. Participation in the program
is voluntary for both borrowers and lenders. Meaning you can apply for the program, but your lender can
turn down your application, even if you meet all the qualifications. The Hope for Homeowners program
ends on September 30, 2011.
There are certain factors you must be to be eligible for the program. The mortgage you wish to modify
must be on your primary residence and you’re not allowed to own any other properties. Your mortgage
must have originated before January 1, 2007 and you’ve made six full payments on the mortgage since
that time. Your current mortgage payments should be more than 31% of your gross income and you
cannot make payments with any help. Your net worth should be less than $1 million dollars, you have not
been convicted of fraud, and you haven’t intentionally defaulted on a mortgage or any other large debt
within the past five years.
Home Affordable Modification Program
The Home Affordable Modification Program (HAMP) is effective for mortgages that originated before
January 1, 2009. The program will be in effect until December 31, 2012. HAMP allows those
homeowners who are eligible to modify their loans so their monthly payments would be no more than
31% of their gross income. The FHA insures new refinance loans and only requires lenders to reduce the
loan balance to 93% of the balance vs. the 90% under the Hope for Homeowners program. The FHA
also pays the lender $1,000 for each loan they refinance through the program.
To be eligible for the program, homeowners have to
show they’re experiencing financial hardship. They can
be in several stages of delinquency, including foreclosure
or bankruptcy, and may even be current on their
payments. Current housing expenses must be more than
31% of the homeowner’s monthly gross income. HAMP
is a voluntary program for lenders. If you’re interested,
you must talk to your lender. If you don’t qualify for HAMP,
lenders must consider you for the Hope for Homeowners
program as well.
Second Lien Modification Program
If you have a second mortgage on a property for which
the primary mortgage was permanently modified through HAMP, then you may qualify for the Second
Lien Modification Program (2MP). Under the program, you may be able to have your second mortgage
modified or receive a principle reduction. Your HAMP modification payments can’t have become
delinquent for more than three months. Your second mortgage should be between $100 and $5,000.
Lenders choose whether to participate in the program and may have more strict eligibility requirements
than the ones listed above.
Principle Reduction Program
Through the Principle Reduction Program, your lender voluntarily agrees to reduce the principle on your
mortgage if the value is significantly less than the balance on the mortgage. Fannie Mae and Freddie
Mac mortgages don’t qualify for this program. You must currently live in the home that’s secured by the
mortgage and the mortgage must have originated before January 1, 2009. Your monthly mortgage
payment should be more than 31% of your gross income and your mortgage balance can be a maximum
of $729,750. You must be able to afford the modified payment. The program is in effect from October 1,
2010 until December 31, 2012.
Lenders may have their own modification programs. If you’re behind on your mortgage, talk to your
lender about what loan modification options are available for you.
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