The federal government has made various initiatives to try to help troubled homeowners with their efforts to remain in their homes. I wanted to revisit the current loan modification program, HAMP as well as the refinance program, HARP, that is already in effect for non-defaulting borrowers to refinance their current mortgage. The question is: Will you qualify? Question yourself the following questions:
Do I have to really fall behind on my loan payments to be eligible for a loan modification?
No. Borrowers must simply demonstrate that they are in danger of falling behind on their mortgage and that they don’t have sufficient income to make future mortgage payments. Borrowers with ballooning mortgage payments or interest rates that are resetting may benefit from the new plot.
What are the loan modification requirements?
To be eligible for modification under the plot, the following criteria must be met:
- the loan must be a first mortgage on the borrower’s primary residence, and
- borrowers must currently be paying more than 31% of their monthly yucky income toward mortgage payments,
Jumbo loans that exceed Fannie or Freddie loan limits are not eligible.
Ultimately, of course, your eligibility will be determined by your mortgage lender.
What if I am “under water” and my mortgage is more than the value of my property?
As long as the amount owed on a first mortgage does not exceed 105% of the home’s current value, borrowers with limited equity can refinance into a 30-year or 15-year fixed-rate mortgage. This refinance option is open to only to borrowers with conforming loans that are owned or guaranteed by Fannie Mae or Freddie Mac. Borrowers must show that 1.) they are current on mortgage payments and 2) that they will be able to meet the new mortgage payments.
How do I know if my mortgage is owned or guaranteed by Fannie or Freddie?
Borrowers should contact their lender to see if their mortgage is owned or guaranteed by Fannie or Freddie or you can look up your loan online here to check.
Does my lender HAVE to participate in the program?
No. Participation by lenders is voluntary, but the government provides subsidies to encourage lenders to modify loans. For example, mortgage servicers receive $1,000 for each loan modification and can also get another $1,000 annually for three years if the borrower stays current on the loan.
For more information, please visit MakingHomeAffordable.gov
