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Loan Modification Programs

Written By: admin - Feb• 12•13

Loan Modification Programs Definition And Types Available

Loan modification programs are in place to prevent the borrower from defaulting on a loan. For the most part, any loan can be modified. We’re going to talk about the most mainstream ones below.

Types of loan modifications:

  • The lowering of an interest rate, or the changing of a rate type
  • The decreasing of the principal in the loan
  • The lowering of or dismissing of late fees, or other penal type fees
  • Expansion of the borrower’s time to pay back
  • A maximum payment amount can be put into place as a certain portion of the borrower’s income

Is this the end?

If you are late, or even in default, the terms of your loan can still be modified. There are many different programs available, the terms for each one can be much different than those of the others.

There isn’t a lender I know of that wants the threat of a person not being able to pay back the amount that they owe. This is the reason that almost all lending institutions are willing to work with you on figuring out a plan of action to make your particular situation more easily digestible.

Government programs

A change made to a loan may or may not be part of a government program. The government can make certain programs mandatory. However, they can also make the programs be at the choice of the lender to use. Usually, when a program isn’t mandatory, the government will provide encouragement for the institution to participate, and actually slightly induce them to, making the changes to the agreement be less risky, or slightly more in their favor to partake in.

Perhaps one of the most popular programs being used as of recently can be found HERE. However, in this article, we’re going to focus primarily on a slightly different loan known as HAMP or Home Affordable Modification Program. This program has helped millions of people who were having a very difficult time paying their mortgages.

Basically, the government has come together with many banks to make this happen. In fact, it is now the customary procedure for seeking out potential borrowers.

Am I eligible?

The plan has several eligibility requirements that have to met before being considered into the program:

  • Any modifying of the loan has to be started before December 31st, 2012
  • Only persons that can verified that default is immenent are considered
  • Each property has to be a personal dwelling
  • Borrowers must present all income proof, and also sign a promise that says they are, in fact, having a hard time with finances
  • The amount borrowed can be raised to accomodate clients that live in multi-family homes
  • Each loan must be a first lien. And the amount cannot exceed the $730,000 threshold
  • The loans must be orginated before 2009.

As of this writing, the HARP program is no longer available unless you have started the process before end of December deadline. Fortunately though, there are always certain similar programs available these days that you may be able to use to help you modify your current loan. I would suggest doing some simple research to find out what may be a good fit for you. Keep in mind that a good resource for such information is from a bank or mortgage broker. Good luck with you loan modifications!

 

 

 

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