Housing Industry heaved a sigh of relief after the official declaration of federal Housing Finance Agency with an announcement that principal reduction is coming. The scheme is going to be a stress reliever for those whose loans are approved and guaranteed by Fannie Mae or Freddie Mac.
Number of persons affected from principal reduction
As stated by FHFA it is expected that around 33000 loan borrowers will be eligible to qualify for the principal reduction program. The stated scheme is having very stringent rules regarding the eligibility criteria. The owner occupant needs not to suffer from strategic default to claim for the benefits of the program even if he has offended the loan repayment regulations for the period of 90 days or more. Cut off date in this regard is March 1, 2016. Other additional requirements to be eligible are the outstanding unpaid principal balance. Borrower can only apply if the outstanding amount is $250,000 or less and whose mark to market loan-to-value ratios and more than one 115%. The plan aims at maximizing support and assistance for the homeless to decrease the possibility of foreclosure by providing win-win situation for the borrower and government-sponsored Enterprises equally. The modification sound all principal reduction capitalization outstanding arrearages, reducing interest rate comparable with existing market rate, stretching the tenure of loan to 40 years and setting a tolerable amount of principal that can be forgone and forgiven in Future.
Loan modification services
You might need following loan modification services in addition to principal reduction assistance like mortgage modification, foreclosure forbearance, short sale, Mortgage Assistance and counselling. Seeking the services of expert of the loan modification is the most urgent requirement of time. By browsing countless service providers you can easily make the right choice for you .however do keep in mind that such service providers are not associated with state or approved by the lender or government even getting support from the service provider may result in the disagreement from your lender about terms related to loan. Failure to pay mortgage instalments may not only affect your credit worthiness but also result in loss of your property.
Principal reduction may save you from foreclosure