Loan Modification Update-New Programs take Effect
There was some good news for troubled homeowners this week as new programs were announced that are aimed at helping delinquent borrowers more easily obtain a loan modification to avoid foreclosure. First, Bank of America, owner of Countrywide, introduced a new systematic mortgage loan modification program as part of a predatory lending settlement. Countrywide customers may qualify for these new benefits:
$8.7 billion earmarked to assist in loan modifications
400,000 loans to be reviewed
Loan modifications offering a lower interest rate and reduced principle
Foreclosures on delinquent loans to be suspended pending loan reviews
Late fees and pre-payment penalties to be waived
Lump sum payments to borrowers who can’t afford their monthly payment after a loan modification and who lose their homes thru foreclosure in the future
Also, Hope for Homeowners, signed into law July 2008, took effect October 1 and offers to refinance troubled borrowers into a low, fixed rate, government insured loan. This new program is expected to help thousands of homeowners refinance into an affordable monthly mortgage payment. Here is a brief outline of the program:
$300 billion allotted to assist distressed homeowners
Qualified borrowers must live in their homes and have loans that were originated between 1/1/2005 and 6/30/2007
Borrowers must be spending at least 31% of their gross monthly income on their current monthly mortgage payment
To participate, lenders are required to forgive all debt above 90% of the homes current appraised value-this means a reduction in the loan balance to accurately reflect the home’s current market value
This is a voluntary program and borrowers must ask their lender if they are willing to agree to it
http://www.trulia.com/blog/susan_gregory/2008/10/loan_modification_update
