The Making Home Affordable Program introduced by the Obama Administration strives to keep homeowners in their homes by lowering their monthly payments. The current economic crisis has caused many Americans to fall behind in their mortgages and risk foreclosure. Lenders as well as borrowers incur great losses during a foreclosure. Thus, the mortgage modification program was conceived in conjunction with dozens of lenders, investors, and loan servicers.
The mortgage modification program strives to reduce a homeowner’s mortgage payments to 31% of their incomes. To this end, flexible interest rates may be fixed, the payment term may be extended, late fees may be waived, or the principal might be cut. In some instances, loans have been restructured into forty year loans at a 5% fixed rate.
A lawyer may be able to help negotiate a mortgage modification. Many documents need to be compiled, and a hardship letter has to be prepared. The mortgage modification law specifically allows lawyers to help negotiate modifications on behalf of homeowners. Homeowners struggling with their mortgage payments should be proactive in seeking a mortgage modication and repayment plan. One does not need to fall behind before applying. In fact, becoming seriously delinquent may prevent lenders from offering a modification at all.