The Federal Housing Finance Agency (FHFA) recently announced that some
homeowners will now be eligible for a principal reduction on their mortgages,
which will help the owners stay in their homes.
The program applies to mortgages owned by Fannie Mae and Freddie Mac, two
of the largest government-backed companies which purchase mortgage loans.
The FHFA’s new Principal Reduction Modification program will allow
the companies to offer struggling homeowners principal reduction in order
to stay in their homes.
To be eligible for a principal reduction, the homeowner must use the home
as his or her main residence, have a mortgage principal balance of less
than $250,000, and be at least 90 days delinquent on their mortgage payments
as of March 1, 2016. Additionally, the mortgage balance must be at least
115% of the home’s current value. So, if a home is currently valued
at $100,000, the outstanding mortgage balance must be at least $115,000.
The FHFA estimates that approximately 33,000 homeowners around the country
will be eligible for a principal reduction. Loan servicers will be required
to actively identify borrowers who are eligible for the program and must
contact the borrowers by October 15, 2016.
If a homeowner is eligible for the program, he or she will first have the
mortgage loan adjusted so that the interest rate is at the current market
level. Additionally, the terms of the mortgage will be extended to 40
years, and a portion of the mortgage loan will be put into forbearance.
If the homeowner makes the first three payments on the modified loan on
time, then the amount of the mortgage in forbearance will be forgiven.
For more information about this program, homeowners can review the
FHFA’s fact sheet, which will provide more thorough information about eligibility and the
steps required in the principal reduction process.
If you are unable to make your mortgage payments, you have several options
to reduce your payments, modify your loan, and avoid foreclosure. At Loan
Lawyers, our attorneys can provide advice about the best option for your
financial situation, and will work to help you afford your home.
To schedule a free consultation, contact Loan Lawyers today by calling
(888) FIGHT-13 (344-4813).