5 Loan Modifications That Can Help You Avoid Foreclosure
If you have fallen behind on your mortgage payments or gotten a notice of foreclosure you may feel lost, scared and confused. We understand how you feel and we want to help, the first step towards stopping a potential foreclosure is getting educated. Today we want to educate you on 5 loan modifications under the Making Home Affordable Program that can help you avoid foreclosure.
- Home Affordable Modification Program
This program effectively lowers your mortgage payment down to 31 percent of your verified monthly pre-tax income to making payments more affordable. This is a great option for someone who is employed but simply cannot afford their home and needs help making sure their home ownership can be continued long term.
- Mortgage was started on or before January 1, 2009
- You owe up to $729,750 on your primary residence or single unit rental property
- The property has not been condemned
- You have a financial hardship and are either delinquent or in danger of falling behind on your mortgage payments
- You have sufficient, documented income to support a modified payment
- Not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction
If you are eligible contact your mortgage servicer to see if they participate in this program. They will be able to tell you if you qualify or if other alternatives may fit your situation better.
- Principal Reduction Alternative
This program was designed to take homes that are worth much less than they owe known as underwater by encouraging servicers and investors to reduce the amount you owe on your home.
- Your mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac
- You owe more than your home is worth
- You occupy the house as your primary residence
- You obtained your mortgage on or before January 1, 2009
- Your mortgage payment is more than 31 percent of your gross (pre-tax) monthly income
- You owe up to $729,750 on your 1st mortgage
- You have a financial hardship and are either delinquent or in danger of falling behind
- You have sufficient, documented income to support the modified payment.
- You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.
If you have been unlucky enough to buy in a rapidly declining market and found yourself unable to pay the mortgage or refinance this could be a great option for you. With this program you also must contact your mortgage servicer to get the process started.
- Home Affordable Refinance ProgramThis program is perfect for those who are struggling but current on their mortgage and have been unable to obtain a traditional refinance because the value of your home has declined.
- The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
- The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
- The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
- The current loan-to-value ratio must be greater than 80%.
- The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.
Utilizing this program will be more difficult with the others due to the eligibility restraints being so tight but it could be a great resource for someone who is struggling and looking to lighten the burden of their mortgage.
- Home Affordable Unemployment ProgramIf you have lost your job and are having trouble making your mortgage payment this program may be able to help you. It can a temporarily reduce or suspend your mortgage payments for up to 12 months giving you time to find a job and avoid foreclosure.
- You are unemployed and eligible for unemployment benefits.
- You occupy the house as your primary residence.
- You have not previously received any other special modifications.
- You obtained your mortgage on or before January 1, 2009.
- You owe less than $729,750 on your home.
This is great news for anyone having a rough time in this economy in danger of losing their home due to being laid off or losing their job.
- FHA Forbearance for Unemployed Homeowners
The final foreclosure avoidance program we have to discuss is another for those who find themselves out of work and facing mounting mortgage payments. This one is specific to Federal Housing Administration loans and requires mortgage servicer’s to extend forbearance for the unemployed for up to 12 months. The only eligibility for this forbearance is the loss of a job and contacting your mortgage servicer.
We hope you found these programs for avoiding foreclosure useful and that you never have to experience one. If you are not eligible for these programs and need to sell your home fast to avoid foreclosure we can provide a written offer in as little as 48 hours, just fill out our form here and you will be contacted.
Sources: U.S. Department of Housing and Urban Development , Making Home Affordable.Gov