Although the new government program for distressed homeowners was announced on Feb. 18, it took until this week to become available. Six of the nation’s largest banks signed up to participate: JPMorgan Chase, Wells Fargo, Citigroup, GMAC Mortgage, Saxon Mortgage Services, and Select Portfolio Servicing.
$50 billion has been allocated for the program, and the Dept. of Housing and Urban Development will provide additional funds. The plan calls for lenders to reduce interest rates so a family’s monthly mortgage obligation is no more than 38% of its pre-tax income. Lenders may also reduce loan balances. After the loans are modified, the government will provide enough money to reduce payments to 31% of income.
There are incentives in the program for lenders to be flexible, and for homeowners to profit. According to Realtor.org, "Participating servicers get $1,000 a year for each modification and another $1,000 a year for three years if the borrower remains current. Servicers get an extra $500 if they do the modifications before the borrower falls behind in his payments—and the borrower gets $1,500. Also, homeowners get $1,000 a year for five years if they remain current on their payments. The money must be used to reduce their principal balances."
If you are in a distressed situation, or still current on your payments but need loan modifications, be sure and contact your lender before you get behind or go to foreclosure. I just finished the course to obtain the Certified Distress Property Expert designation and have done many short sales with Ormond Beach properties over the past few years. Call or email me - I can help!
Sherry Armstrong, Realtor
386-679-3191
sherry@sherryarmstrong.com
www.sherryarmstrong.com
www.ormondbeachflhome.com
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