Foreclosures: Why Missing Mortgage Payments Carries a Heavy Price ow.ly/2Kk4Xj
Showing posts with label Homeowner Assistance. Show all posts
Showing posts with label Homeowner Assistance. Show all posts
Friday, July 18, 2014
Wednesday, July 2, 2014
Mortgage Modifications
A Mortgage Modification is permanent change in a homeowner’s home loan terms that makes the monthly loan payments affordable. The goal of mortgage modification is to prevent foreclosure.
Mortgage modification can benefit homeowners by preventing them from losing their home and can benefit lenders by avoiding the costly foreclosure process.
To apply for a mortgage modification, a homeowner must complete an application package documenting income, assets, expenses and financial hardship.
The biggest mortgage modification program in the United States is the Home Affordable Refinance Program, created in 2009 by the federal government in response to the nation's housing crisis. This program helps homeowners who are struggling to pay their Freddie Mac or Fannie Mae-backed mortgage apply for mortgage modification with their loan servicer.
These are borrowers who cannot do a traditional refinance to improve their loan terms because their home value has declined below the mortgage balance.
A similar program called the Home Affordable Modification Program helps borrowers with Federal Housing Administration-backed mortgages. Borrowers can also apply for a mortgage modification outside these federal programs. A nonprofit housing counselor can help with the process.
While a mortgage modification generally means less income for the bank because of a reduction in the mortgage’s principal amount, interest rate or both, this loss may be less than what the bank would experience by foreclosing on the borrower and reselling the property. Mortgage modification can turn a less-than-ideal situation into a win-win.
Still, foreclosure was much more common than mortgage modification during the housing crisis because banks claimed they lacked the resources to handle the large number of modification requests. As a result many homeowners who may have qualified for mortgage modifications were not able to get into a modification program and, instead, lost their homes to foreclosure.
Mortgage modification can benefit homeowners by preventing them from losing their home and can benefit lenders by avoiding the costly foreclosure process.
To apply for a mortgage modification, a homeowner must complete an application package documenting income, assets, expenses and financial hardship.
The biggest mortgage modification program in the United States is the Home Affordable Refinance Program, created in 2009 by the federal government in response to the nation's housing crisis. This program helps homeowners who are struggling to pay their Freddie Mac or Fannie Mae-backed mortgage apply for mortgage modification with their loan servicer.
These are borrowers who cannot do a traditional refinance to improve their loan terms because their home value has declined below the mortgage balance.
A similar program called the Home Affordable Modification Program helps borrowers with Federal Housing Administration-backed mortgages. Borrowers can also apply for a mortgage modification outside these federal programs. A nonprofit housing counselor can help with the process.
While a mortgage modification generally means less income for the bank because of a reduction in the mortgage’s principal amount, interest rate or both, this loss may be less than what the bank would experience by foreclosing on the borrower and reselling the property. Mortgage modification can turn a less-than-ideal situation into a win-win.
Still, foreclosure was much more common than mortgage modification during the housing crisis because banks claimed they lacked the resources to handle the large number of modification requests. As a result many homeowners who may have qualified for mortgage modifications were not able to get into a modification program and, instead, lost their homes to foreclosure.
Sunday, June 29, 2014
How Bi-weekly Mortgage Payments Can Save You Money
A bi-weekly mortgage is a mortgage payment plan where payments are made every two weeks, as opposed to the more traditional monthly payment plan. Making mortgage payments every two weeks, as opposed to monthly, will result in the equivalent of one additional monthly payment being made each year.
This extra payment is applied toward the principal balance of the mortgage, and will lead to substantial interest savings over the life of a long-term mortgage.
When a bi-weekly payment plan is set up, most mortgage servicing companies simply hold the first half of the monthly payment until the second half arrives and then make the full monthly payment. If a simple interest bi-weekly mortgage plan can be set up, each payment received is immediately applied toward the principal balance of the mortgage leading to additional interest savings.
Converting an existing mortgage to a bi-weekly plan usually carries some fees. A self-disciplined borrower can gain the same benefits of a bi-weekly plan by making one additional mortgage payment each year, or by paying an extra amount each month equal to 1/12 of the scheduled monthly payment.
This extra payment is applied toward the principal balance of the mortgage, and will lead to substantial interest savings over the life of a long-term mortgage.
When a bi-weekly payment plan is set up, most mortgage servicing companies simply hold the first half of the monthly payment until the second half arrives and then make the full monthly payment. If a simple interest bi-weekly mortgage plan can be set up, each payment received is immediately applied toward the principal balance of the mortgage leading to additional interest savings.
Converting an existing mortgage to a bi-weekly plan usually carries some fees. A self-disciplined borrower can gain the same benefits of a bi-weekly plan by making one additional mortgage payment each year, or by paying an extra amount each month equal to 1/12 of the scheduled monthly payment.
Saturday, June 28, 2014
Obama Administration to Expand Home Affordable Programs
WASHINGTON -- The Obama administration is extending for another year a program aimed at helping people struggling to avoid foreclosure on their homes.
The administration is also expanding an effort to increase access to affordable rental housing. In addition, it is launching an effort to revive the portion of the mortgage market backed by private industry.
The Home Affordable Modification Program had provided relief to more than 1.3 million homeowners who have been able to permanently modify their mortgages to more affordable payments.
Additionally, the Treasury Department and the Department of Housing and Urban Development are joining efforts to support financing of FHA-insured mortgages for construction and renovation of rental housing.
In a further effort to expand access to mortgages for prospective homeowners, Treasury is launching an effort to revive the private-label securities market.
Prior to the housing crisis, private-label securities provided mortgages for many qualified borrowers who did not meet eligibility requirements by government-sponsored enterprises such as Fannie Mae and Freddie Mac.
The administration is also expanding an effort to increase access to affordable rental housing. In addition, it is launching an effort to revive the portion of the mortgage market backed by private industry.
The Home Affordable Modification Program had provided relief to more than 1.3 million homeowners who have been able to permanently modify their mortgages to more affordable payments.
Additionally, the Treasury Department and the Department of Housing and Urban Development are joining efforts to support financing of FHA-insured mortgages for construction and renovation of rental housing.
In a further effort to expand access to mortgages for prospective homeowners, Treasury is launching an effort to revive the private-label securities market.
Prior to the housing crisis, private-label securities provided mortgages for many qualified borrowers who did not meet eligibility requirements by government-sponsored enterprises such as Fannie Mae and Freddie Mac.
Saturday, June 21, 2014
Refinance Now Before Rates Rise
(HOUSTON) – There has never been a better time to refinance your home. That’s because of a little-known government program called the Home Affordable Refinance Plan (HARP).
The Home Affordable Refinance Plan allows Americans to refinance their homes at shockingly low rates, and reduce their payments by an average of $3,000 a year.
But here’s the catch – like most government programs, this is likely temporary. Currently the program is set to expire on December 31, 2015. But the good news is, once you’re in, you’re in. If the thought of a lower payment or fewer years on your mortgage sounds appealing, refinance now before rates rise.
The Home Affordable Refinance Plan allows Americans to refinance their homes at shockingly low rates, and reduce their payments by an average of $3,000 a year.
But here’s the catch – like most government programs, this is likely temporary. Currently the program is set to expire on December 31, 2015. But the good news is, once you’re in, you’re in. If the thought of a lower payment or fewer years on your mortgage sounds appealing, refinance now before rates rise.
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