March 26, 2010
What has been included to better Modification Programs?
- Lenders and investors will reduce principal on underwater mortgages
- Will keep homeowners in their homes
- While unemployed homeowners look for jobs, the government might qualify for 3-6 months of reduced mortgage payments.
- The payment would be reduced to 31% of the borrower’s current income.
- After 3-6 months, if the borrower continues to carry a mortgage payment that is more than 31% of their monthly gross income, must be considered for a work out plan on their mortgage.
- The borrowers must be residing in the property to be considered a candidate for modification and they should have taken out the loan on the mortgage before January 1, 2009, which should also be below $729,750.
- Banks will receive incentives when the principal on a loan and second loan is lowered.
- Through the Federal Housing Administration will allow for lenders to refinance underwater first and second mortgages. To cover losses for banks and investors of the write downs, the FHA will be funded $14 billion from the modification program.
- With the write downs homeowners will not be so deep underwater.
- New loans that are less than 115% will be refinanced.
With the addition of such rules and regulations, the set goal of 3 million to 4 million modifications may be accomplished through 2010.
