Millions
of American homeowners have been stung by the mortgage crunch over the last few
years. In 2008 alone 1.3 million
homeowners faced the real situation of being unable to pay their mortgage and
subsequently lost their homes in foreclosure.
With the help of new legislation the Home Affordable Modification
Program has been put into action to help millions more of Americans who face
the same situation.
Who is Eligible?
The
loan modification program administered by the federal government will make
efforts to help millions homeowners having trouble paying on their
mortgage. To be eligible, a mortgage
must have been funded on or before Jan. 1, 2009. Other eligibility requirements include:
Owner occupied properties –
Only homeowners who make their mortgaged home their principal residence
are eligible. Real estate investors
who rent their property are not eligible.
First lien only –
Only the first mortgage is eligible for this program. Any secondary mortgages are not
eligible.
Maximum principal balance –
Only the first $729,750 of principal balance on any first mortgage is
eligible for modification.
What Are The Possible Loan
Modifications?
Homeowners
who are suffering with their mortgage payments may be able to make changes to
their mortgage documents that permanently change the monthly payment
amount. By making payments more
affordable homeowners have the chance to save their homes.
Lower Debt Service Requirement –
The loan mod program will help homeowners lower their payments to only 31%
of their gross monthly income. Most
lenders require a mortgage payment to be no more than 38% of gross monthly
income, so the change will make a substantial difference in mortgage
affordability.
Lower Interest Rate –
The loan mod program will encourage lenders to lower interest rates to an
affordable rate, but not lower than 2%.
Longer Term –
After the interest rate has been considerably reduced and payments are
reduced lower to meet the 31% debt service, a lender may extend the term
of the mortgage to up to 40 years and re-amortize over that period.
Principal Forgiveness –
Ultimately mortgage lenders are encouraged to forgive a portion of the
principal balance. Though the
lender must write that portion off, it allows the borrower to reach lower
and more affordable payments and avoids the expensive foreclosure
alternative.
The
Home Affordable Modification Program is now in place and ready to help
Americans save their homes from foreclosure.
If you are facing the real possibility of foreclosure, contact the
program today and let them get the modification process started for you.
