New program streamlines mortgage modifications
The federal government has introduced a new mortgage modification program to simplify and streamline the process of modifying some homeowners’ mortgages so they will be able to afford their monthly mortgage payments.
The new program is "a bold attempt to move quickly in defining a nationwide program that can quickly and easily reach many of these troubled borrowers, thereby stabilizing those families and the communities and neighborhoods in which they live," said James B. Lockhart, director of the Federal Housing Finance Agency (FHFA), a regulatory arm of the federal government, in Washington, D.C.
This new mortgage modification program might be a good fit for you if:
● your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac;
● you’ve missed at least three mortgage payments;
● your home is your primary residence;
● you haven't filed for bankruptcy;
● you've experienced a hardship or change in your financial circumstances; and
● you want to keep your home.
The streamlined mortgage modification program uses a simplified "fast-track" method to modify your mortgage so your monthly payments won't be more than 38 percent of your gross monthly income. Your payment could be reduced by lowering your interest rate, lengthening the term of your loan or deferring payment of interest or part of your loan balance. The total amount that you owe on your mortgage won't be reduced through this modification program.
You don't need to have a high credit score or equity in your home to qualify for the streamlined mortgage modification program.
To find out whether this mortgage modification program will fit your situation, call your loan servicer and be prepared to provide information about your monthly income. The telephone number for your loan servicer should be on your monthly mortgage statement.
If the streamlined mortgage modification program doesn't fit your situation, your loan servicer may try to find another way to make your mortgage payments more affordable for you through a customized process.
The program was put together by Fannie Mae, Freddie Mac, Hope Now, the U.S. Treasury, the Federal Housing Administration, the FHFA and a group of loan servicers. Guidelines for servicers to implement the program are expected to be available by Dec. 15, 2008.
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