Loan Modifications

What is a Loan Modification?

A loan modification is an agreement between you and your lender that allows you to modify the existing terms of your home loan with the goal of making your payments more affordable.   Remember that your bank has a financial incentive to keep you in your home making payments.  If you have the opportunity to try a home loan modification program, our experienced legal team will help negotiate to obtain a favorable deal for you and your family.

What Programs are Available?

Although your lender may have specific requirements for eligibility into a home loan modification, there are also government programs available to assist you.

1. Home Affordable Modification Program (HAMP):

Created by the Financial Stability Act of 2009, the HAMP program was built in conjunction with lenders and the federal government to create some standardized loan modification guidelines to take into consideration when qualifying a homeowner for a loan modification.   You may be eligible for this program if you meet all of the following:

• Your mortgage was issued on or before January 1, 2009.
• You owe less than $729,750.00 on your primary residence or single unit rental property.
• Your property has not been condemned
• You have experienced some sort of financial hardship and you have missed payments or are about to miss payments.
• You have income that can be documented which is sufficient to potentially support a modified payment.
• You have not been convicted of felony larceny, theft, fraud or forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction in the past 10 years.

The HAMP program provides incentives to lenders who participate in this modification scheme.  HAMP can be a powerful tool for families facing foreclosure.

2. Home Affordable Refinance Program (HARP):

This is another federal program setup in 2009 to aid homeowners who have seen a decrease in the value of their homes relative to their debt obligations securing the property.   Lenders participating in the program may have additional qualifications for eligibility but the government eligibility criterion under this plan includes:

• Your mortgage is owned by Freddie Mac or Fannie Mae.   These organizations may hold your mortgage even though you have never dealt with them.  The mortgage has to have been acquired by either Freddie Mac or Fannie Mae on or before May 31, 2009.
• You must be current on mortgage payments and not have had a 30 day late payment issued in the past six months and no more than one late payment within the last twelve months.
• Loan to Value Ratio of 80%:  This means that the ratio of your loan amount to the actual value of your home may not exceed 80%.  For example, if your property is worth $300,000.00 and you took out a loan for $260,000.00 your loan to value ratio would be 260/300= %87.
• Must not have been previously refinanced through HARP unless it was a Fannie Mae loan from March –May of 2009.

 3. Florida Hardest Hit Program

Florida housing Finance Corporation along with the US Treasury has created a foreclosure prevention assistance program that is designed for Florida Residents.  Unemployed or underemployed homeowners who are behind on their mortgage payments can use the program to make payments or avoid a default.  In order to be eligible for either you must be a Florida resident with household income below 140% of the area median income provided by the US Department of Housing and Urban Development.

 Currently there are two programs in place.

I.  Unemployment Mortgage Assistance Program (UMAP):

Loan funds are used to pay monthly mortgage and escrowed expenses until the homeowner can resume the payment plan for up to 12 months with a cap of $24,000.00.   Additionally, some money on this program can be used to pay for past due amounts owed up to $18,000.00.

II. Mortgage Loan Reinstatement Plan (MLRP):

Under this program loan funds can be paid directly to the servicer to help satisfy all or some of any past amounts owed for a first mortgage up to $25,000.00.  This program is available to homeowners who are unemployed or underemployed and had a 10% dip in come and are now able to make their payments.  Your total house payment debt must be less than 31% of your income and you must also complete a hardship affidavit.