FHA to offer loan modifications
July 31, 2009 by admin
The department of Housing and Urban Development (HUD) announced this week they will now allow for FHA mortgages to be modified under similar guidelines followed by Making Home Affordable Program (MHA). The making home affordable program was targeted as home owners who were currently past due with their mortgage payment or in jeopardy of becoming past due with their mortgage payment. The government rolled out the Making Home Affordable Program earlier this year, in conjunction with mortgage lenders and the agency partners Fannie Mae and Freddie Mac, these loans would only offer the ability for a loan modifications for conventional home loans.
The push by HUD to expand the MHA program to include FHA loans comes at a time when home foreclosures are continuing to increase. The conventional loan MHA program has also come under fire from advocates in the consumer industry as it has been slow in helping out home owners as consumers struggle to deal with their loan servicer to refinance or modify their home loans. This past week, the government met with the nation’s largest twenty loan servicers to push them to expand their ability to meet the market demands and help struggling home owners. The announcement this week by HUD expanding the MHA program to FHA loans will certainly help homeowners in these mortgages. The program is similar in its goal to help struggling home owners, but offers an alternative course to bring the house payment down.
The FHA program will lower the principle balance for the homeowner to lower their house payment and bring their monthly payment in line so that their housing payment ratios do not exceed thirty one percent of their gross monthly income. Homeowners, who are currently behind on their mortgage payments, qualify with a few caveats:
• They can not be more than twelve months behind on their loan
• The property must be their primary residence
• They must document their financial hardship was not caused intentionally
• Total debt to income ratios cannot exceed 55%
The HUD program is aimed at helping bring down the rate of home foreclosures that have crippled the real estate market. HUD is offering financial incentives to mortgage lenders who offer the loan program. FHA mortgages have become increasingly popular over the last six months, as they offer buyers the opportunity to purchase a new home with minimal down payments (3%) and provide additional credit flexibility that is not found with conventional home loans. The real estate market is showing signs of improvement and this latest HUD program will only help stabilize the market further.