Making Home Affordable Mortgage Modification Program Is A Flop
August 21, 2010 by admin
Failing at over a fifty percent clip in their prospect of modifying mortgage loans, the Making Home Affordable mortgage loan modification program has been a complete bust in helping struggling homeowners keep their homes. The number of borrowers that applied for the governments modification program and have since fallen behind on their home payments eclipsed fifty percent according to recent reports released from the government. The number of areas the program has fallen short is wide ranging from the inability of lenders to process paperwork in a timely manner, to the inability of the programs to stabilize housing and incentivize borrowers from walking away from their homes.
Recapping the Making Home Affordable Mortgage Program at its original premise:
One of the current issues that the American President addresses is the inability of some American homeowners to keep up with their home mortgage loan payments. The President presented a program called Making Home Affordable Home Loan Modification Plan that caters to those homeowners who have a hard time paying their monthly mortgage with a possibility of home foreclosure.
The said program has two primary components. The first element is catered to those American homeowners who can barely afford to get a home mortgage refinancing due to a decrease in the market value of their home from the so-called “housing bust.†Refinancing is replacing an existing loan with a new loan under a different scheme. With the new mortgage plan, the interest rates are lower and more favorable to the homeowner to be updated with the monthly repayments. The second component of the program is addressed to homeowners who find it difficult to pay their monthly mortgage regularly, especially those who are at the brink of foreclosure and would like to take advantage of home loan modification to keep up with their mortgage payments. Loan modification is an alteration of certain terms of an already existing loan.
The Main Aspect of the mortgage program
The major aspect of the making home affordable modification and refinance program is allowing more than 80% for the loan amount from the market value of the property. The depreciation value of homes today allowed for a higher loan amount and a lower mortgage interest rates.
General Eligibility Requirements for the Refinancing Program
In order for homeowners to take advantage of the program, they have to qualify for the following requirements:
1. The home for refinancing must be occupied by the primary resident and not by an investor
2. The home loan must be under the protection of Fannie Mae or Freddie Mac
3. There must be no late payments made more than 30 days for the mortgage in the last 12 months
4. The home must not be vacant or unoccupied by the residents
5. The homeowner must have sufficient amount of income to get an existing loan
6. The current mortgage should be between 80% to 105% of the current market value of the property or otherwise known as the loan to value (LTV) ratio
Although this has been a pretty good offer by the government to the people, not everyone qualifies for the refinance program due to the restrictions of the qualifications. Home properties that are owned by real estate investors, second homes, homes with loan to value (LTV) ratios below 80% and loans that are not within the control of either Fannie Mae or Freddie Mac cannot qualify for the refinancing program as well as the loan modification program.