Save that house! Streamlined Modification Program

There is a new program that is now available for delinquent mortgage holders. The program is called Streamlined Modification Program, it is an attempt to help as many as possible to keep their home from foreclosure.  The program is available to loans owned by Fannie Mae, Freddie Mac, Hope Now and it’s 27 service partners.

The mortgage servicer will work with the homeowner to adjust the monthly payment to be 38% of income.  The monthly payment would be principal + interest  + taxes + (homeowners  insurance, mortgage insurance, homeowner dues, condo dues).

There are several ways that they can make the adjustment:

1. One way is to extend the term, up to 40 years. 
2. Another way is to reduce the interest rate.  They can reduce it to as low as 3%.  This reduction will last for five years and then the interest rate will adjust up by 1 % per year until it maxes at the current market rate or the original interest rate whichever is lower.
3. They can even reduce the principal balance to the current market value for the house.  This would only be available if the principal loan balance exceeds the current market value.  The reduction of the principal balance is not completely forgiven, it will become a balloon payment that will be due at the end of the loan term. And if the owner sells prior to the end of the loan term, it would be due at settlement to satisfy the loan.

Any or all of the methods can be used to get the monthly payment down to the 38% of income.

Criteria to qualify:

• The loan must be at least 90 days delinquent and
• The amount owed must be at least 90% of the homes value.

The program started on December 15th, and I have seen banks offering it to their delinquent mortgage holders by way of a letter.  So go ahead and open up that correspondence from the bank!  And if they do not send a letter about the program, give them a call.  They have been offered an incentive for every loan that they can enroll into the program, they are going to try to make it work. 

The mortgage holder should call their servicer and ask about it. 

The servicer will ask for

1. Proof of income, and amount of income.
2. A statement of hardship. Mortgage holder should be willing and able to explain the circumstances that lead to falling behind, (for example such as job loss/change)
3. They might ask monthly expenses.

Here are some links that go into detail about the program:

Washington Post article

CNN Money article

The FHFA’s (Federal Housing Finance Agency) press release about the program and FAQ:

I have set up a detailed spreadsheet to help my clients who are in a short sale position to figure out if they would be able to have their loan adjusted to an affordable payment.  I would be happy to help anyone else who is contemplating it, just give me a call or email.  The loan servicer can also help to figure out if the loan can be adjusted to be affordable.  The most important step is to get started, and work through it one phone call at a time.

Spread the word and help folks save their houses.  Think Stability.

 

Maggie

(410) 852-9524

Listings Search at www.HelpShop.com

We can also help find rentals.  And we can help to sell a house in a short sale if the loan modification isn’t possible.  A short sale is better on the credit report than a foreclosure.  If someone you know could use our help contact us.

Photo credit, Jeff Turner

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