The loan modification process that existed during the mortgage crisis of 2007 is not the process that exists today. What used to be a rogue process lacking government checks and balances, has now become highly regulated and as a result, has brought a lot of relief to struggling homeowners.
Options for Homeowners
When the new loan modification process kicked in on July 1, 2013 it enabled mortgage borrowers who had loans through Fannie Mae or Freddie Mac to more easily pursue loan workout options with their mortgage servicers. Additional guidelines were added to this program this past January, 2014. You will find a summary of those changes below.
The new program does not require documentation of a hardship, which is unlike HAMP. Loan modifications have become easier to obtain because they are focused on getting homeowners back on track through the practice of getting them to make three trial payments on time. While it is not required to show traditional financial hardship, homeowners must be at least 90 days behind, and no more than 720 days delinquent on their loans, to be eligible. The mortgage must also be a first-lien note that is at least a year old. Additionally, the amount remaining on their mortgage has to be a minimum of 80% of the property value.
National Mortgage Settlement
This loan modification program has its origins in the $25 billion dollar National Mortgage Settlement, in which the Attorney Generals of 49 states settled with the nation’s five largest mortgage lenders to pay out billions for the foreclosure abuses of the housing crash. As a result of the settlement, the government has created a variety of new mortgage regulations that include improvements on the loan modification sector.
HAMP Still an Option
It’s important to remember that HAMP is still a viable option for mortgages that are not owned by Freddie or Fannie. And borrowers should keep in mind that mortgage lenders and servicers each have their own loan modification programs as well. You will still need to practice the utmost care and attention to the process of getting a loan mod.
For more information and guidance on loan modification, you need the experts at RHM LAW LLP.