Simplified Loan Modifications Now Available From FHFA

Edward J DeMarco, the acting Federal Housing Finance Agency (FHFA) has announced a new policy that works to prevent foreclosures for loans guaranteed or owed from Freddie or Fannie. While the program seems to offer advantages to homeowners in need, it’s also receiving criticism for the potential backlash it may create.

Going into effect in just a few months on July 1^st of 2013, borrowers who are 90 or more days late on their last mortgage payment will be granted the option of implementing the simplified loan modification initiative. Foreclosures will now be easier and faster, sparing the homeowners the hassle and hardship of having to present documents supporting their financial claim.

The 26 percent of homeowners that are ‘underwater’ and owe more than their homes are worth are rejoicing over the good news and have high hopes for saving their home. Florida residents can receive loan modifications making their monthly mortgage payments more affordable. The lower monthly mortgage payments are a result of lower interest rates, longer loan terms and or principal forbearances. To qualify for the measure under FHFA terms, you must be at least 90 days behind in payments with a mortgage age of over one year old. In addition to those two requirements, an 80 percent plus loan-to-value ratio is necessary. If you’ve changed or refinanced your mortgage in the past, you are still eligible as long as changes were only made once.

Homeowners no longer need to show proof of hardship, speeding up the process significantly. They’ll be placed on trial payments based off of the requirements and their approval terms to start their loan modification. Not having to show proof of hardship has ruffled the feathers of some opposed to the loan modification act. Opponents voice that homeowners will wrongly file for the modification just for lower monthly payments without penalties. Analysts predict that there’s a significant chance that the 26% number quoted above will rise in upcoming months as more homeowners choose this route.

The act was embraced by many authoritative figures who see the challenge current loan modifications present. Less time will be spent on filing, saving both the Florida borrower and the government time and money. The force behind the changes is FHFA, which is a well-known government agency. Opponents say there is a moral confliction due to their key involvement. FHFA’s DeMarco encourages those who are considering and filing for a loan modification “to provide documentation to support modification options that would likely result in additional borrower savings.”

Those who choose to take the route of seeking a loan modification are encouraged to speak with a Florida mortgage lawyer to determine their situation and course of action. Lawyers are available and generally offer free consultations to discuss the best options.