In response to the collapse of the mortgage industry and their home markets, the federal government established programs to help struggling homeowners remain in their houses. The government purchased Fannie Mae and Freddie Mac, the two biggest government-sponsored mortgage investors to create mortgage refinance and modification programs designed to help homeowners make their mortgage payments. The US Department of Housing and Urban Development, HUD required their approved housing counseling services to provide counseling to homeowners facing foreclosure.
Counseling
Housing counselors are located throughout the country. These counselling services specialize in helping home buyers and homeowners with the mortgage process. These firms are all nonprofit businesses, and a few receive grants from HUD or other government agencies. These firms also specialize in foreclosure prevention. If you’re falling behind in your mortgage or anxiety you may, contact HUD toll free at 800-569-4287 to locate a counselor in your area.
Refinancing
1 issue is declining home values. Some homeowners discover they have a mortgage with a balance that exceeds the home’s value. Freddie Mac and fannie Mae have established special loan programs for homeowners who have a loan owned by one of these agencies. Contact your servicer, the company you make your payment to, and ask if company owns your loan and if you are eligible for any special refinance programs for this.
Temporary Modification
Servicers are invited to provide payment reductions or eliminations if they will assist a family make it through a temporary issue. Usually the servicer expands the loan duration by the amount of suspended payments. Once the homeowner makes it through the issue, the payments restart as scheduled without any negative marks on the credit report.
Permanent Modification
Servicers may permanently change the loan. The modification is on loan amount the interest rate or both. The modification will ensure the new loan repayment does not exceed 31 percent of the borrower’s gross monthly income. Borrowers must provide evidence of their income to the service ; typically this includes providing taxation returns and paystubs, W-2s. Conclusion of a trial period is required prior to the loan modification is made irreversible. If the borrower accomplishes any of their trial period payments, the modification is canceled by the servicer.
Foreclosure Alternatives
Occasionally giving up the home is the only alternative. Rather than waiting to be foreclosed upon, creditors may attempt to sell the home. Even if the debtors owe more than the home is worth, lenders are letting them sell the home as a short sale (if the home is sold for less than what is owed). Borrowers may also give back the home. This is until it is fully foreclosed upon when the home is turned over by a debtor. Fannie Mae and Freddie Mac have rental back programs that allow the homeowners to rent the home after they’ve given up the home. This permits them time to find another place to call home.