What Is Federal Loan Modification?
For homeowners who are struggling to make their mortgage payments, one option may be a federal loan modification. The Making Home Affordable program allows homeowners restructure their mortgage debt and keep their homes.
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Eligibility Requirements
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To pre-qualify for the Making Home Affordable Program, there is specific criteria that must be met. Your home must be a primary residence, you must owe less than $729,750 on your first mortgage, the mortgage origination date must be prior to Jan. 1, 2009 and you must be able to demonstrate true financial hardship.
Exclusions
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Mortgages for vacation homes or rental property are not eligible for modification. The program currently does not apply to Federal Housing Administration Loans.
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Modification Terms
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Loans may be modified by a reduction in interest rate, a reduction of principal or an extension of the payment term.
Special Requirements
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Before a permanent modification may be granted, homeowners are required to undergo a three-month trial period during which they are expected to make regular mortgage payments to their lender.
Warnng
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Avoid scams. You should never pay a fee for any services related to federal loan modification.
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References
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- Photo Credit Image by Flickr.com, courtesy of woodley wonderworks
