To retrieve this alarming situation a lot banks and federal authorities started various mortgage modification programs.
Mortgage Loan Modifications
Mortgage Loan modifications are similar to refinancing of home loans. Both have the same intent of lowering the monthly installment repayments so that the home owner can repay the mortgage without trouble. Except that unlike refinancing a new loan is not taken but the existing mortgage terms are modified. Here the monthly installment repayments are reduced either by increasing the tenure of repayment or lowering the interest rate or both.
The reason banks agree to loan modifications is that the option of foreclosure is much more expensive to them. Also rampant foreclosures drives down the entire real equity value of entire neighborhoods, which threatens their other investments too(other homeowners who would have taken mortgage from them).
The first of the mortgage modification program to help the distressed home owners was started by FDIC when it took over the Indy Mac Bank. The program though was launched for the existing customers of Indy Mac bank only. But it was like a prototype for all other mortgage modification program that would be launched later by other banks and agencies later on.
HAMP (Home Affordable Modification Program) is a federal mortgage modification program was launched by the Obama administration (hence also known as Obama loan modification program ) to help millions of home owners who were facing the threat of foreclosures and bankruptcies. The US government encouraged various agencies and banks to take part in these programs voluntarily by giving them several incentives.
Obama Loan modification qualifications:
The basic eligibility for applying for HAMP loan modification program is as follows
• The mortgage loan should have originated before 2009.
• The home owner has defaulted on his past few payments or can show documented proof of financial hardship that he will not be able afford repayment of his mortgage in the current form in future. The reason of hardship can be anything ranging from job loss, decrease in income to sudden increase in expenditures.
• The monthly housing cost (primary mortgage + insurance + HOA fees) should be more than 31% of gross monthly income.
• The total home loan amount should not exceed $ 729,750.
• The real estate property in question should be home owners primary residence. ie. He himself must be occupying and residing in that property.
Many banks and lending institutions have voluntarily participated in this program. One of the major player taking part being Bank of America. In fact the bank claims to have helped more than 85000 home owners through Bank of America Loan modification program under HAMP.
Mortgage Loan Modifications
Mortgage Loan modifications are similar to refinancing of home loans. Both have the same intent of lowering the monthly installment repayments so that the home owner can repay the mortgage without trouble. Except that unlike refinancing a new loan is not taken but the existing mortgage terms are modified. Here the monthly installment repayments are reduced either by increasing the tenure of repayment or lowering the interest rate or both.
The reason banks agree to loan modifications is that the option of foreclosure is much more expensive to them. Also rampant foreclosures drives down the entire real equity value of entire neighborhoods, which threatens their other investments too(other homeowners who would have taken mortgage from them).
The first of the mortgage modification program to help the distressed home owners was started by FDIC when it took over the Indy Mac Bank. The program though was launched for the existing customers of Indy Mac bank only. But it was like a prototype for all other mortgage modification program that would be launched later by other banks and agencies later on.
HAMP (Home Affordable Modification Program) is a federal mortgage modification program was launched by the Obama administration (hence also known as Obama loan modification program ) to help millions of home owners who were facing the threat of foreclosures and bankruptcies. The US government encouraged various agencies and banks to take part in these programs voluntarily by giving them several incentives.
Obama Loan modification qualifications:
The basic eligibility for applying for HAMP loan modification program is as follows
• The mortgage loan should have originated before 2009.
• The home owner has defaulted on his past few payments or can show documented proof of financial hardship that he will not be able afford repayment of his mortgage in the current form in future. The reason of hardship can be anything ranging from job loss, decrease in income to sudden increase in expenditures.
• The monthly housing cost (primary mortgage + insurance + HOA fees) should be more than 31% of gross monthly income.
• The total home loan amount should not exceed $ 729,750.
• The real estate property in question should be home owners primary residence. ie. He himself must be occupying and residing in that property.
Many banks and lending institutions have voluntarily participated in this program. One of the major player taking part being Bank of America. In fact the bank claims to have helped more than 85000 home owners through Bank of America Loan modification program under HAMP.
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