Foreclosure fix finished
Mortgage holders who are facing foreclosure can now take advantage of the government’s personal loan modification program.
President Barack Obama and his administration have launched their $75 billion foreclosure prevention program. Borrowers can contact loan servicers right now to access benefits.
Plan reduces monthly payments
The plan is expected to help up to 4 million homeowners who have missed payments on their mortgage. Their monthly payments will be reduced to no more than 31 percent of their monthly income.
The program doesn’t leave out homeowners who have not missed payments but are struggling to make them. Mortgage holders in this category can also qualify for refinancing. This could help another 5 million homeowners.
To qualify
Borrowers must meet specific criteria to qualify for the loan modification program. Here is a list, provided by CNN Money, of the specifications. Borrowers must:
- have obtained their mortgage before Jan. 1, 2009;
- have a primary mortgage of less than $729,500;
- live in the property;
- fully document their income by providing tax returns and pay stubs;
- sign a statement of financial hardship; and
- go for counseling if their total household debt – including auto loans, credit cards and alimony – totals more than 55 percent of their income.
We can hook you up with an expert to help you modify your loan!
Details on new loan contracts
Under this new program, loan modification services must reduce interest rates so borrowers’ mortgage payments are 38 percent of their monthly income. However, the interest rate cannot fall below 2 percent.
The government will use the $75 billion fund to pay an amount that reduces the mortgage holders out-of-pocket expense to 31 percent of their income per month.
Future of modified loans
New interest rates will be in place for five years. After that, the interest rate will go up 1 percent each year until it reaches either the original interest rate or the prevailing mortgage rate at the time of the modification, whichever is lower.
If a lower interest rate doesn’t bring payments down far enough, lenders will extend the term up to 40 years or shift part of the principal to the end of the loan at no interest. Servicers can also reduce the loan’s balance.
Iam a loan officer and I have a lot of clients who will want to do loan modifications through you. You do work with brokers and loan officers, don’t you?
It seems to me that we gave those mortgage companies a lot of money, and they should have had a plan of this nature in place already. I wonder what happened to all that cash that we infused them with – did it just disappear? They could have wiped out a sizable chunk of the debt they were owed, but instead it seems it all went to refurbishing offices and ivory back scratchers.
Didn’t the companies receiving bailout money have to show a business plan first? That would have prevented a lot of questions. They should be showing receipts for every dollar spent.