Home Loan Modification
Homeowners stuck with sub prime or adjustable rate mortgages will soon be getting the home loan modification help they desperately need. Several new home loan modification programs have been launched by the Federal government and lenders to make it easier for delinquent homeowners to get a home loan modification. Billions of dollars have been earmarked to help borrowers get out of their toxic mortgage loans and help solve the mortgage and housing crisis.
How can you get the home loan modification help you need? First, you need to determine if you will qualify for one of these new home loan modification government or lender programs. If you have a Countrywide loan that was originated before December 1, 2007, you may be eligible of part of the $8.7 billion lending abuse settlement home loan modification program. Under this new home loan modification program, distressed or foreclosed Countrywide borrowers can receive interest rate reductions, principle reductions, penalties and fees waiver and receive additional lump sum payments to borrowers facing imminent foreclosure.
The Home Affordable Modification Program (HAMP) – The Obama Plan
The Making Home Affordable Modification program is designed to lower the mortgage payments of qualified borrowers to equal 31% of their gross monthly income by using one or more of these options as needed to reach the 31% target payment:
Minimum eligibility criteria for Home Affordable Modification:
Second Mortgages:
How it Works
The plan provides for a trial modification for 3 months at the new interest rate and payment. If you make the payments on time and are current at the end of the trial period, then your lender will convert it to a permanent agreement for five years. Homeowners must agree to have their taxes and insurance escrowed (paid monthly)-this is required even if your prior loan was not escrowed.
Beginning in year six, if your modified rate was below market (say 2%), then the rate may increase no more than one percentage point per year until it reaches the rate cap indicated in your modification agreement. This cap is equal to the prevailing rate on the date your modification was finalized as published by Freddie Mac. If the modified rate is at or above the prevailing rate, that rate will be fixed for the life of the loan.
For example:
Modified Rate lowered to 2% for 3 months, and then after you make 3 payments on time, the rate is fixed for 5 years. The prevailing Freddie Mac interest rate on the day the modification was finalized is 5.5%. Beginning in year 6, your interest rate can increase 1% per year until it reaches 5.5%, where it is fixed for life of the loan.
Standard Formula for reaching the Target Payment:
Waterfall Modification Method to reach Principal & Interest Target Payment:
If your loan can be modified using these standard methods to reach your Target Principal and Interest Payment, you may be a good candidate for the Home Affordable Modification Plan.
The recent collapse of Washington Mutual and Wachovia due to their delinquent loan portfolios has also opened a window of opportunity for home loan modification help. There is a new urgency to get their mess cleaned up as soon as possible. If you have a bad home loan with Washington Mutual or Wachovia, you need to find out about the new streamlined home loan modification programs they are beginning to offer. Thousands of homeowners will be given the chance to convert their unaffordable home loan into a lower, affordable payment with a home loan modification.
If you have been turned down in the past for home loan modification help, or have been worried about qualifying for a home loan modification, now is the time to find out about these new home loan modification programs. You can get all the information you need to know in a low cost, easy to follow guide you can purchase and download right online. The Complete Loan Modification Guide handbook is the most up to date and complete source of information available on home loan modification. When you purchase and download this home edition handbook, you will learn exactly how to qualify for a home loan modification, you will be provided with all the required home loan modification forms and be given detailed instructions on how to complete them properly. You learn how to write a compelling hardship letter, about your legal rights, and much more.
Don’t take chances with your family’s home and future-get all the information and step by step home loan modification help you need so you can get started today. Thousands of homeowners have successfully fixed their loan-you can too!
Purchase and download The Complete Loan Modification Guide today and get started on the path to financial security and peace of mind.
How can you get the home loan modification help you need? First, you need to determine if you will qualify for one of these new home loan modification government or lender programs. If you have a Countrywide loan that was originated before December 1, 2007, you may be eligible of part of the $8.7 billion lending abuse settlement home loan modification program. Under this new home loan modification program, distressed or foreclosed Countrywide borrowers can receive interest rate reductions, principle reductions, penalties and fees waiver and receive additional lump sum payments to borrowers facing imminent foreclosure.
The Home Affordable Modification Program (HAMP) – The Obama Plan
This Treasury Department initiative is designed to offer a standardized loan modification plan that streamlines the process while encouraging lenders and servicers to participate by offering financial incentives for every loan modification completed. $75 billion dollars has been allocated by the federal government to help millions of families obtain a more affordable mortgage payment and avoid foreclosure thru this plan. This program may be an option for you-read more about the eligibility requirements to determine if you may qualify, then check to see if your lender or servicer is participating.
The Making Home Affordable Modification program is designed to lower the mortgage payments of qualified borrowers to equal 31% of their gross monthly income by using one or more of these options as needed to reach the 31% target payment:
- First, interest rate reductions to as low as 2% on first trust deeds
- Second, extending loan terms to 40 years
- Third, principal forbearance
- Finally, principal forgiveness (not required-at the sole discretion of the lender)
Minimum eligibility criteria for Home Affordable Modification:
- Primary residences only & one-to-four unit properties only
- Unpaid principal balances equal to $729,750 or less, (higher for 2 to 4 unit properties) on first trust deeds (separate plan for second trust deeds)
- Loan must have been originated prior to January 1, 2009
- Current mortgage payment (including taxes, insurance & homeowners association dues) must equal more than 31% of the borrowers gross monthly income
- Borrowers are not required to be delinquent on their payments to participate
- Borrowers may not be in bankruptcy
Second Mortgages:
- Rate may be reduced to 1%
- Incentives to lenders paid by the Treasury department to retire the debt for 12 cents on the dollar
How it Works
The plan provides for a trial modification for 3 months at the new interest rate and payment. If you make the payments on time and are current at the end of the trial period, then your lender will convert it to a permanent agreement for five years. Homeowners must agree to have their taxes and insurance escrowed (paid monthly)-this is required even if your prior loan was not escrowed.
Beginning in year six, if your modified rate was below market (say 2%), then the rate may increase no more than one percentage point per year until it reaches the rate cap indicated in your modification agreement. This cap is equal to the prevailing rate on the date your modification was finalized as published by Freddie Mac. If the modified rate is at or above the prevailing rate, that rate will be fixed for the life of the loan.
For example:
Modified Rate lowered to 2% for 3 months, and then after you make 3 payments on time, the rate is fixed for 5 years. The prevailing Freddie Mac interest rate on the day the modification was finalized is 5.5%. Beginning in year 6, your interest rate can increase 1% per year until it reaches 5.5%, where it is fixed for life of the loan.
Standard Formula for reaching the Target Payment:
- Gross Monthly household income times 31% = Target Payment
- Deduct monthly property taxes, homeowners insurance and any homeowners dues = Principal & Interest Target Payment
Waterfall Modification Method to reach Principal & Interest Target Payment:
- Using current loan amount, reduce the interest rate by .125 increments to as low as 2%
- If more is needed to reach the target, extend loan term to 40 years
- If still more is needed, defer or forgive some principal balance, but not below 100% of current market value
If your loan can be modified using these standard methods to reach your Target Principal and Interest Payment, you may be a good candidate for the Home Affordable Modification Plan.
The recent collapse of Washington Mutual and Wachovia due to their delinquent loan portfolios has also opened a window of opportunity for home loan modification help. There is a new urgency to get their mess cleaned up as soon as possible. If you have a bad home loan with Washington Mutual or Wachovia, you need to find out about the new streamlined home loan modification programs they are beginning to offer. Thousands of homeowners will be given the chance to convert their unaffordable home loan into a lower, affordable payment with a home loan modification.
If you have been turned down in the past for home loan modification help, or have been worried about qualifying for a home loan modification, now is the time to find out about these new home loan modification programs. You can get all the information you need to know in a low cost, easy to follow guide you can purchase and download right online. The Complete Loan Modification Guide handbook is the most up to date and complete source of information available on home loan modification. When you purchase and download this home edition handbook, you will learn exactly how to qualify for a home loan modification, you will be provided with all the required home loan modification forms and be given detailed instructions on how to complete them properly. You learn how to write a compelling hardship letter, about your legal rights, and much more.
Don’t take chances with your family’s home and future-get all the information and step by step home loan modification help you need so you can get started today. Thousands of homeowners have successfully fixed their loan-you can too!
Purchase and download The Complete Loan Modification Guide today and get started on the path to financial security and peace of mind.