These mortgage assistance plans offered by these companies are crucial because a majority of single-family home loans in the U.S. are backed by Fannie Mae and Freddie Mac. This company continues to grow the number of mortgages they support and own on a daily basis. The two lenders, who together dominate the mortgage industry, are key to keeping the marketplace operating effectively.
The new government plan could potentially help over 600,000 families that are currently delinquent on their mortgages. The primary purpose of a mortgage loan modification is to bring a delinquent or at-risk borrower current on their payments, or to help a borrower Avoid foreclosure.
In order to be eligible for assistance from one of the programs, mortgage borrowers must be at least three months delinquent on their home payments, and they must owe 90 percent or more than the home is currently worth. This means that if you don’t live in the home you’re trying to get a loan for, you won’t be able to get help from the government. And if you’ve already declared bankruptcy, you also won’t be able to get assistance.
There are several ways in which borrowers could receive help. They include things like:
The interest rate on their current mortgage would be reduced so that borrowers would not need to pay more than 38 percent of their gross monthly income on housing expenses or towards mortgage debt. This would make it easier for borrowers to afford their mortgage payments.
Another option to make mortgage payments more manageable is to extend the loan from 30 years to 40 years. This would give the borrower more time to pay off the debt without having to raise their monthly payment. This means that you will have to pay less money overall, and some of the money you owe will not accrue interest.
If the borrower has to foreclose, Fannie and Freddie may let the borrower keep living in the home as a tenant. Freddie Mac is offering a new rental option for mortgage borrowers. This option will allow borrowers to keep their homes as rental properties after they have completed a short sale or deed-in-lieu of foreclosure. This option is available for borrowers who are current on their mortgage payments, but who are unable to sell their home for enough to pay off the mortgage.