The Federal Housing Finance Agency has come up with a simple and streamlined loan modification program which has helped the resident owners immensely. Basically the program has aimed to make the entire loan modification program easier and thus reduce the number of foreclosures.
There have been quite a lot of rumors surrounding this program, but following are certain questions and their answers which can help clear the air of doubt around this act.
What is a loan modification program exactly?
To go by the dictionary definition of loan modification, it means to revise, change or adjust your loan. It basically has the following terms in its purview.
The first is the conversion of a floating or adjustable mortgage rate to a fixed mortgage rate. It can also include change in the rate of interest. It can also include changing the amortization term or change in the loan maturity date. Such and many more terms are included in the loan modification program.
Now what is a streamlined loan modification program?
This includes the re-modification or re-structuring which entails less of the paper work involved previously. This makes the process a lot simpler, leaner and clearer to understand and follow. It helps the homeowners avail the benchmark ratio and accordingly set their mortgage rate. This ratio is calculated based on their monthly gross income.
The reason behind creation of this program.
Foreclosures mean a loss of money to the banks. Hence, the government has always aimed at keeping the foreclosures of the minimum. This program has helped the government to eliminate unnecessary foreclosures. They have gone a step ahead and simplified the mortgage modification requirements, which are based on the eligibility to make it simpler on the homeowners.
How is the loan modification program help complete?
Here, the borrower needs to sign the loan modification agreement. He has to return it with the first month’s payment. Once, the first payment has been cleared, this deems the borrower on a 3 month trial period. If during this the borrower stays on his current mortgage consistently, then the program stands to become permanent. This becomes hugely beneficial for the borrower due to its flexibility.
Social media description: Answers you have always wanted to know about the new streamlined loan modification program. Here is a brief preview of some important questions.