Pros and Cons About HUD Loan Modification
Due to the recent turn in the housing market and the subprime mortgage fiasco, former President Bush issued the HOPE for Homeowners program in October 2008. At first, borrowers were widely unaware about HUD Loan Modification. The FHA (HUD’s Federal Housing Administration) tried to inform over 400,000 borrowers about HUD Loan Modification.
Many states issued press releases and opened up office to help assist in the loan modification process. There were many benefits about HUD Loan Modification that were designed to give the economy a boost including:
• Secure loans for ARM borrowers that were late more than three months in a 12-month period. (Most mortgage terms will not allow refinancing if you are late more than three months.)
• Refinancing through FHA at up to 96.5% of property value.
• A program for lenders to voluntarily reduce the mortgage in order to avoid the cost of foreclosure to both the lender and borrower.
Since the economy was hit so hard by the recession, this seemed to be the answer to all prayers. The more people who knew about HUD Loan Modification, the better the economy would be. However, there were some unseen problems, including:
• Lenders were not obligated to participate and declined many offers to bring down the balance.
• Borrowers could not come up with the remaining balance of the loan after FHA secured the home for 90% of the value.
• Many homeowners were unable to provide proof from their original loan application due to the large number of stated income loans issued by subprime lenders.
As a result, the Hope project is being refurbished, and Obama issued the American Recovery and Reinvestment Act on February 18, 2009 to motivate lenders and borrowers to refinance.
For a free loan modification report, go to http://www.freeloanmodificationreport.com/. The report will help you answer any questions you have about HUD Loan Modification.
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