Federal Mortgage Assistance Programs
Government Home Loan Modification Refinancing to Avoid Foreclosure
Oct 3, 2009
Homeowners that can’t make their monthly mortgage loan payments due to financial hardships may be eligible for the Home Affordable Modification Program or HAMP. This federal mortgage assistance program is part of the Obama Administrations Making Home Affordable Refinance Program. HAMP is applicable to homeowners that may be current on their mortgage payments and having difficulty meeting their obligations due to financial hardship. The program is also applicable to homeowners that have missed payments due to financial hardships.
Mortgage Loans Backed by Fannie May and Freddie Mac
Banks and other lending institutions (a.k.a. mortgage servicer) that offer home mortgage loans may be reluctant to a loan modification. Usually a mortgage servicer will do what’s in their best interest. They may feel that if a homeowner is current on their monthly payments there’s no need for a loan modification. They may also feel that it’s in their best interest to foreclose on a property rather than modifying a loan.
If the current mortgage is owned or guaranteed by Freddie Mac or Fannie May, the mortgage servicer is mandated by the Federal Government to participate in the Home Affordable Modification Program. This means that the mortgage servicer must offer a loan modification to homeowners that qualify for the program if Freddie Mac or Fannie May owns the loan. A mortgage servicer can still participate in HAMP if the loan is not owned or guaranteed by Freddie Mac or Fannie May, although participation is not mandatory.
Home Affordable Modification Program Qualification
- Must be the occupant of the home
- The amount still owed on the mortgage for a single unit home must be less than $729,750 (multiple units vary)
- The homeowner(s) monthly gross income must be greater than 31% of the modified loans total monthly payments, including property tax and insurance.
- The current mortgage was started on or before January 1, 2009
- Must have a documented financial hardship that will not allow the homeowner to make their current loan payments
In order to reduce the monthly payments to an amount equal to 31% of the homeowner(s) gross monthly income, the interest rate for HAMP can go as low as 2%. The loan could also be extended to 40 years, although it is not mandated. Depending on the circumstances, a balloon payment could be attached to the modification.
The Next Step for the Federal Loan Modification Program
Once it’s determined that a homeowner qualifies for the Home Affordable Modification Program, the next step is to contact the mortgage servicer to start the modification process. Even if Fannie May or Freddie Mac does not own the mortgage, many mortgage servicers have volunteered to participate in the federal loan modification program.
To find out if Fannie May or Freddie Mac owns a mortgage, just click on the links and follow the instructions. If the loan is not owned by either organization, ask the mortgage servicer if they are participating in the Federal program. Read the Making Home Affordable Refinance Program to find out more options for the Federal program.
Source:
makinghomesaffordable.gov
 |
 |
