Mortgage Modification Information – Your Questions Answered

How has it reached a point that so many people are requesting mortgage modification information? The FDIC or the Federal Deposit Insurance Corporation recently showcased their plan to systematically avoid foreclosures on some 1.5 million home mortgage repossessions. The plan is to empower mortgage companies by sharing their losses, if they agree to refinance home loans. According to their own website, the program is specifically designed to rehabilitate crippled home loans and help them reach 'healthy loan status'. This does not only apply to foreclosures as the FDIC intends to rehabilitate 2.2 million property loans in total.

Am I eligible?

Most home owners who own a mortgage that is seriously delinquent will qualify. This only applies to a primary residence (where you live). In some cases, where contracts include terms that involve loan modifications, banks will do their best to accommodate all who are eligible. In short they have to be 'owner occupied properties'

What happens if I default again?

Due to the tremendous risk involved in extending credit for accounts with a history of delinquency, the 'government loss sharing' will only take effect once you have paid properly on your modified loan for 6 months. This means that if you default in this period, you may just end up back at square one again. It also doesn't mean that you can default after this period as there is no contingency for 'repeat' loan modifications.

How much will I expect to pay on my modified loan?

By implementing a universal NPV or net present value test, banks will take certain factors in to account including affordability. The idea is to reach a standard of 31% of your income or 'mortgage debt-to-income ratio'

Will the banks be deciding who gets to apply?

Participating banks will be expected to make regular reviews of eligible loans according to a pre-set systematic process. They don't have a choice in this.

How does anybody but me benefit from this?

The system works on a calculation that takes government loss share over a period of time, compared with what your loan will eventually bring in. It balances out. Nobody is going to lose money here. It's not a charity.

By how much longer will my loan be extended?

The government loss-sharing payments will carry on for 8 years. So banks will not be likely to extend your re-negotiated loan beyond an extra 7 or 8 years as they will lose out if they extend it past that subsidized period.

It is important to remember that a loan modification doesn't lower the amount that you owe. It means that you'll be paying less, over a longer period. The idea is to pay more as soon as the belt loosens. By doing this and following the mortgage modification information available at any participating bank or financial affiliates you will avoid paying an awful lot of interest in the long term.

For essential tips and facts about how to get approved for a Mortgage Modification - visit my simple, no nonsense loan modification guide and resource: http://Home-Loan-Modifications.info