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New U.S. Treasury Rules Help Homeowners with Loan Modification

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    New U.S. Treasury Rules Help Homeowners with Loan Modification

    According the new U.S. Treasury rules, borrowers that have mortgages below $729,750 (one unit), $934,200 (two units), $1,129,250 (three units) and $1,403,400 (four units) will be eligible for the loan modification program. This new figure allows homeowners with the more expensive homes to qualify under their program. One advantage is the U.S. Treasury Department will match interest rate reduction while writing down the principal so your payments are lower than the 31%. Homeowners benefit from not having their credit score damaged and it helps the homeowner from going into foreclosure.

    The The Home Affordable Modification Program Guidelines of March 4, 2009, "borrowers are eligible to receive a Pay-for-Performance Success Payment that goes straight towards reducing the principal balance on the mortgage loan as long as the borrower is current on his or her monthly payments. Borrowers can receive up to $1,000 of Pay-for-Performance Success Payments each year for up to five years." Another benefit to the borrower is the one-time bonus incentive, where a $1,500 payment incentive is distributed to lender/investors and $500 to service providers.

    Eligibility for this program varies such as pooling and servicing agreements (PSAs), the Loan Modification will be subjected to an origination date on or before January 1, 2009, an expiration date of December 31, 2012 for acceptance, qualifying terms, foreclosure status, loan exclusion types, subordinate financing, contract restrictions with respect to soliciting borrowers, and a current loan-to-value (LTV) ratio. These eligibility requirements and the process of loan modification can take time. The time it takes will depend on you, your lender and the company you are working with during the loan modification process.

    Throughout the loan modification process you will notice that you do not have to pay costs for the process or need a home appraisal. As credit scores begin to drop loan modifications attract more homeowners because a typical mortgage refinancing requires a higher credit score. Whatever you decide to do, please take the time to read the material and information to make sure you understand the process. Each process offers pros and cons the homeowner may find difficult to decide. The government programs mentioned are to support lendors and borrowers in the loan modification process through a loan modification company.

    Jon Barrett, MBA
    Last edited by jeffrey; 07-02-2009, 07:40 AM. Reason: forum rules