Government program helps
Hang on to your house through the federal foreclosure prevention plan.
The federal government launched its foreclosure prevention plan in March, and since then Chase Morgan, the servicing side of JP Morgan Chase, alone has modified 15,000 loans.
One man from Ohio had his payments lowered from $1,200 per month to $725 per month, according to CNN Money.
Who is mortgage loan modification for?
The government started this program to keep homeowners from losing their homes. The loan modification program can help people who have fallen behind on their mortgages as well as Fannie Mae and Freddie Mac mortgage holders who have kept up with payments but are struggling.
To qualify, borrowers must show proof of hardship and meet these criteria:
- 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.
Getting started
A great way to get started on the road to mortgage loan modification is to go to the government’s web site, makinghomeaffordable.gov. You can take a quiz to make sure you are eligible for the program.
The government intends for the program to help between 4 million and 5 million homeowners, so there are still plenty of loan modifications to go around. The government has dedicated $75 billion to helping struggling homeowners get loan modification.
How loan modification works
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.
Seek help
If you’d like to get in touch with a loan modification expert, check out my article 5 Things You Should Know About Mortgage Loan Modification, and fill out the form at the bottom. We will get you in contact with a qualified, professional financial expert who can make the loan modification process a snap for you.
A mortgage loan modification expert will also make sure that there are no paperwork mistakes, help negotiate the very best terms for you and assess your overall financial situation to determine the best long-term solution to your financial needs.
I understand that there are many real stories about Chase. For this reason I think it is better to ask for help from a loan modification consultant.
If you want to know more real stories about how hard it is to work with Chase, check out loansafe.org.
It is advised to receive help from an attorney when it comes to your loan modification procedure. They have great experience in renegotiating the terms with your lender.
Interesting!
The loan modification process can be frustrating and confusing for many distressed homeowners. But you have to know what exactly is loan modification. A loan modification is a permanent change in one or more terms of a borrower’s home loan.
We fall within the hardship and enough
income to sustain a new lower payment.
After 4 months of giving Chase the
same paperwork over and over again.
We were denied a modification, they
said we did not have a hardship.
Our house payment is 49 percent of
my husbands gross pay. He has a pay
reduction, and we are in full amortization of a predatory option arm.
THE GOVERNMENT PROGRAM IS FAILING. IT’S VOLUNTARY AND THEY BANKS DO NOT WANT
TO DO IT. I AM DISPUTING WHAT THEY ARE SAYING. I HAVE CALLED THE HOPE NOW
PEOPLE, AND THEY ARE TRYING TO HELP.
I TOLD THE CHASE REP. I WILL DISPUTE
THIS FOREVER!!!!!
I remember a time when Fannie Mae and Freddie Mac would not buy mortgage loans from banks if the monthly loan payment was more than 36% of the borrower’s income. Now the government is trying to get the loans down to 38%? If banks have abandoned this common sense standard for the past several years, it is no mystery why we are in the financial bind we are today.
I am guessing that the large banks are getting some form of incentive from the government to provide the loan modifications. Has anybody heard of customers of smaller banks getting similar offers for loan modifications.
It darn well better be in full swing – we paid enough for it. This is one of the few programs that benefits the people who are paying for the bailout directly. We financed it through the tax dollars we pay, and there’s no good reason why it all should go to finance companies like Citi, Bank of America, and AIG, when it could be put to better use by the people themselves. It is OUR money after all – we should have gotten the say over how it’s spent.