While we are still in one of the worst economic recessions in the last century, millions of people with home mortgages have a new reason to celebrate. This is a tight recession, and many people are struggling just to get by. President Obama launched a new initiative for home loan modifications that could get their monthly responsibilities to a manageable level.
The Obama Mortgage as it has been nick named was introduced in February and put into effect on March 4, 2009. There are two parts to the initiative. First, it will relax refinancing requirements so that as many as 5 million homeowners will now have that option open to them. Second, it will let homeowners work with their lender to modify their loans. There have been a lot of questions about how to qualify got the FHA Loans Modification program. Below you will find a copy of HUD.gov FAQ page. It should answer any questions you might have.
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From HUD.GOV her are the most frequently asked questions.
A Loan Modification is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford.
Question 1: In utilizing the Loan Modification option to bring an asset current, can the mortgagee include all fees and corporate advances?
Answer: Mortgagee Letter 2008-21 states in part:
Legal fees and related foreclosure costs for work actually completed
and applicable to the current default episode may be capitalized
into the modified principal balance.
Question 2: May a mortgagee perform an interior inspection of the property if they have concerns about property condition?
Answer: Yes, the mortgagee may conduct any review
it deems necessary to verify that the property has no physical conditions
which adversely impact the mortgagor's continued ability to support
the modified mortgage payment.
Question 3: Can a mortgagee include late charges in the Loan Modification?
Answer: Mortgagee Letter 2008-21 states that accrued late charges should be waived by the mortgagee at the time of the Loan Modification.
Question 4: When utilizing a Loan Modification option, can a mortgagee capitalize an escrow advance for Homeowner's Association fees?
Answer: HUD Handbook 4330.1 REV-5, Paragraph 2-1, Section B, Escrow Obligations states: Mortgagees must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of the FHA-insured mortgage.
Question 5: Is there a new basis interest rate which mortgagees may assess when completing a Loan Modification?
Answer: Yes,
Mortgagee
Letter 2008-21 states that the new basis interest rate is
200 points above the monthly average yield on U.S. Treasury Securities,
adjusted to a constant maturity of 10 years.
Question 6: Will HUD subordinate a Partial Claim, should a mortgagor subsequently default and qualify for a Loan Modification?
Answer: If a mortgagor subsequently defaults and
qualifies for a Loan Modification, HUD will subordinate the Partial
Claim.
Question 7: Are mortgagees required to perform an escrow analysis when completing a Loan Modification?
Answer: Yes,
mortgagees are to perform a retroactive escrow analysis at the time
the Loan Modification to ensure that the delinquent payments being
capitalized reflect the actual escrow requirements required for
those months capitalized.
Question 8: Is the mortgagor eligible for the upfront premium refund at payoff of a modified loan?
Answer: It depends upon when the closing date occurred. For assets closed:
After July 1, 1991 but before January 1, 2001, the 7-year unearned premium refund schedule shown in Mortgagee Letter 1994-1 remains in effect,
On or after January 1, 2001 that are subsequently refinanced, the 5-year refund schedule shown in the attachment of Mortgagee Letter 2000-46 applies, or
On or after December 8, 2004, refunds of upfront MIP are eliminated except, when the mortgagor refinances to another FHA insured mortgage. The refund schedule attached to Mortgagee Letter 2005-03 has been modified to a 3-year period.
Question 9: Can a mortgagee qualify an asset for the Loan Modification option when the mortgagor is unemployed, the spouse is employed, but the spouse name is not on the mortgage?
