What is happening in the world today-what is happening with loan modifications? A recent post about Mesa AZ Loan Modifications-Are They Working? revealed a realtor’s insights and opinions but what is this loan modification and who can get one? After much study and research on this topic, I have found several things and want to share a couple.
First, in order to qualify for a modification you need to 1. have originated the loan before January 2009. 2. have a mortgage payment that exceeds 31% of your income. 3. must be your primary residence. 4. must report having difficulty making your monthly mortgage payments. These are only 4 of the preliminary qualifications.
Originated a loan prior to January 2009-the housing market didn’t just take a turn yesterday. With this qualification, they can more seriously focus on those that purchased homes during the housing market boom-when prices and values increased dramatically over a very short period of time, to fall back down again and create some strenuous financial problems.
A mortgage payment that exceeds 31% of your income-this type of help, the loan modification, is intended to help those that are currently struggling due to an increase rate or payment or possible decrease in income.
Primary Residence- The push is to keep people in their homes. Currently they are not focusing on second homes or rental properties as those are not as detrimental to industry as one’s place of residence.
Difficulty making payments- it is intended to help those whose house payments exceed 31% of their income. It is not intended for people who can comfortably make payments.
Second, there is a significant problem with the conversion rate. What I mean is that the number of people applying for loan modifications far exceeds those that are in the permanent phase. The government is aware of problems such as the conversion rate AND the problem with paperwork. Apparently, loans get stuck in a process of paperwork. There are many details that cannot be forgotten and sometimes borrowers that need to present more paperwork get lost in the shuffle. The US Dept of Treasury recently released this statement, “Increasing the number of borrowers receiving permanent modifications under HAMP is critical to our efforts to preserve affordable and sustainable homeownership,” said HUD Senior Advisor for Housing Finance William Apgar. “While we continue to meet our goals to provide immediate assistance, the updates announced today should enable servicers to transition borrowers more quickly and easily from trial to permanent modification.”
If you are one who has heard your neighbors talking about their Mesa AZ mortgage loan modification, or heard information in the news and you are thinking more seriouslyabout it, consider the pre-qualifications. This may be your opportunity. Is your loan older than January 2009? Is it your primary residence? Does your payment exceed 31% of your income? Are you struggling to make your monthly mortgage payment? The great news about HAMP (Home Affordable Modification Program) is that they WANT to get more of the applications moved into permanent status! The efforts are there, to get more loans modified and create a more stable economy.
Photo: © Lisa Heuer Photography
