Truth in Foreclosure

Do you have a FHA mortgage on your home and wish you could participate in the Home Affordable Loan Modification program?

Up until now, you couldn’t…but that’s changed!

Of course you still have to meet the same requirements to get into the program (see our President Obama’s Home Affordable Loan Modification article for more info), but according to Housingwire.com,

A new workout program, FHA-Home Affordable Modification Program (FHA-HAMP), should be operational by August 15, HUD secretary Shaun Donovan said.

“Tens of thousands of FHA borrowers will now be able to modify their mortgages in the same manner as so many others who are taking advantage of the Administration’s Making Home Affordable program,” Donovan said in a statement Thursday.

The program permanently reduces the borrower’s monthly payment through a partial claim, which defers the repayment of mortgage principal through an interest-free subordinate mortgage that is not due until the first mortgage is paid off.

FHA-HAMP allows lenders to advance funds on the borrower’s behalf, to pay down the

Image by Getty Images via Daylife

loan by up to 30% of the unpaid principal balance and deferring these amounts in a partial claim.

The program calls for a three-month trial period during which borrowers will be expected to make payments of the amount of the future modification. Only once the borrower remains current on all payments under the trial period, the mortgage can be considered for modification.

As part of the HAMP program, FHA said it will pay incentives up to $1,250 to loan servicers that modify FHA-insured loans under the program.

So if you’ve got a hardship and are in default or imminent default, call your servicer after August 15th and see if you’re eligible.

A Blessing in Disguise

Of course, if you’ve been waiting and hoping for this, you should also be prepared to wait on the phone and go through the same endless phone tag that’s already driving so many people crazy!

The same lenders and servicers that service non-FHA loans service FHA loans.  So that means that while it’s great news that you can now modify FHA loans, in the end, it just adds a bunch more people on the phone line every day.  And gives your loss mitigator (once you get assigned one) that many more packages to go through.

So be patient and persistent…and feel free to share your frustrations as a comment.  While we may not be able to do anything about them, it will help others to see they’re not alone.

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