Listen in on a Interview I did on Loan Modifications and the Fannie Mae and Freddie Mac Streamline Loan Modification Program
“This article has been out for several months now and this are constantly changing. Find More information at my new home page Refinance an Upside Down Mortgage”
The Federal Housing Finance Agency, the regulator of Fannie Mae and Freddie Mac, recently announced a new Streamlined Modification Program that is designed to help struggling borrowers avoid foreclosure by having Fannie Mae work with mortgage servicers to do a loan modification into more affordable terms.
You may qualify for a loan modification if all of the following are true:
- Your mortgage loan is owned by Fannie Mae or Freddie Mac.
- Your mortgage loan is 90 or more days past due.
- You occupy the property as your primary residence and must be a one-unit property.
- You are not in bankruptcy.
- Loan originated prior to January 1, 2008
- Your Debt-to-Income Ratio needs to be at 38% using current paystub (another obstacle). See Mortgage Debt-to-income Ratio Information
- You will need to write a hardship letter so go to Sample Hardship Letter here.
To achieve a more affordable mortgage payment through a loan modification, your loan servicer may:
- extend the term of your loan to as much as 40 years
- reduce your mortgage interest rate for a period of time
- defer payment of part of your principal, or
- or offer a combination of all three.
- Principal write-downs and principal forgiveness are prohibited. (This is HUGE)
Through the SMP, servicers may change the terms of a loan to reduce a borrower’s first lien monthly mortgage payment, including taxes, insurance and homeowners association payments, to an amount equal to 38 percent of gross monthly income. The changes in terms may include one or more of the following:
- Adding the accrued interest, escrow advances and costs to the principal balance of the loan, if allowed by state law;
- Extending the length of the mortgage loan as appropriate;
- Reducing the mortgage loan interest rate in increments of 0.125 percent to an interest rate that is not less than 3 percent. If the new rate is set below the market interest rate, after five years it will step up in annual increments to either the original loan interest rate or the market interest rate at the time of the modification, whichever is lower;
- Forbearing on a portion of the principal, which will require the borrower to make a balloon payment when the loan matures, is paid off, or is refinanced.
What You Can Do Today
If you are about to fall behind, or have fallen behind on your mortgage payments, or if your loan has been referred to an attorney, the most important step you can take is to get help early from your mortgage lender, servicer, or housing counselor.
Here are important steps to take immediately:
You have more options if you act quickly. Now is the time to ask for help!
Thanks to Mr. Mortgage here are some potential consequences for accepting the terms of a Loan Modification!
Home owners! Accepting this ’solution’ means you:
If widely accepted by home owners, this will ruin the American consumer and make housing a dead asset class for decades. If you are in a serious negative equity position when signing these forms, as most are, remember that you will:
I know this is a whole lot of information but I wanted to be sure I made you aware of of everything in one shot.
Fannie mae has recently added a mortgage program that will help homeowners with an upside down mortgage refinance 2009 giving them some upside down mortgage relief. I highly recommend looking into no closing cost refinance as a solution to your upside down mortgage