The good news for home owners facing financial hardship resulting in their inability to pay the home loan mortgage is that they now have an option of entering a loan modification program with their lender to reset the interest rate, defer payment for a particular period of time or readjust the principal amount.
A common myth about loan modification is that banks do not want to let the home owner to avail whereas the truth is banks have more than one reason to offer their delinquent borrowers a modification:
1. Loan modification is a federally backed program and banks are given incentives to extend this service to their borrowers.
2. Via home modification programs, banks recover their loan in full without having to go through the hassle of collection agency or foreclosure. More details please visit:-joacimmelin.se gangstar.se grafikbettan.se
However the borrower need not necessarily be delinquent before he/she can apply in the lender’s program. Even under following circumstances the borrower can apply for the modification program:
o If the borrower is faced with circumstances that can result in him defaulting on the mortgage payments in future.
o If borrower’s property value has fallen below the value of debt owed.
o If the adjustable rate mortgage has pushed the principal amount to an unaffordable level and the borrower is unable to seek to refinance the mortgage rates.
The changes in the terms could include any or all of the following:
o The interest rate can be lowered.
o The principal amount of the loan can be reduced
o The monthly payment can be modified to fall within 31% of debt to income ratio of the borrower.
However, the eligibility for modification differs from bank to bank. The prerequisite is that you must have a steady source of income that is enough to pay the adjusted mortgage over and above normal expenses.
The main programs currently are:
Federal home loan modification program: This is a federally backed program where not only the delinquent home loan borrowers can seek help but also the borrowers who think that they might face a financial difficulty in future.
Indy Mac modification program: The borrowers are eligible for the modification for this bank if the loan is held or serviced by Indy Mac.
Federal Housing Finance Agency (FHFA): The borrowers are eligible for the modification programs for this bank if the loan is held or serviced by Fannie Mae or Freddie Mac.
Major Bank’s loan Modification: Major banks in United States such as Citigroup, Bank of America, JP Morgan Chase all have home loan modification programs that borrowers can avail.