Why would banks want to modify their mortgage terms?

Loan modification will improve the value of distressed mortgages through achieving long-term sustainable cash flow for the lender that exceeds the estimated costs of foreclosure.

What are the expected benefits for Borrowers?

Loan modification will allow borrowers to keep their homes as long as they are able to make the adjusted mortgage payments. It will also provide immediate payment relief and stable mortgage rates.

How is the affordability achieved?

Affordable payments are achieved through mortgage term extensions, interest rate reduction, and, or principal forbearance.

Who is eligible for loan modification?

• Borrowers with loans that are at least 60 days delinquent where the loan is considered one day delinquent on the day following the next payment due date.
• Borrowers who are not currently in bankruptcy, or have not been discharged from Chapter 7 bankruptcy since the loan was originated.
• Borrowers whose mortgages have originated on or before January 1, 2009.
• Home owners who occupy the home they're delinquent on as a primary residence.
• Owners of single family 1-4 unit properties.

• First lien loans must have an unpaid principal balance of equal of less than $729,750 for a one unit residence, $934,200 for a two unit residence, $1,129,250 for a three unit residence and $1,403,400 for a four unit residence.

What does the process look like?

After eligibility is determined, the lender will calculate an affordable payment by looking at the borrower's income and debt. The lender will then determine the best strategy of achieving affordability through either interest rate reduction, mortgage term extension, and, or debt forgiveness. The lender will then verify that the modification will achieve a positive economic scenario for the investor. A modification offer will be drafted that will state the new payments and terms of the loan.

What is the first thing a delinquent borrower should do?

Contact your lender and ask for a loan modification application.

Keep in mind that this program is new and that guidelines and requirements may change. Even if you don't think you qualify for the program, don't count yourself out. Lenders may make exceptions.

For more information check the official loan modification guidelines at http://www.ustreas.gov/press/releases/reports/modification_program_guidelines.pdf

Sandy Nelson
Olympia Realtor®, GRI, ASP, Built Green
360-789-7505
www.SandyNelsonRealEstate.com

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