Fannie Mae and Freddie Mac have announced the first-ever principal reduction
loan modification program for homeowners with underwater mortgages –
excellent news for both homeowners and investors.
The implementation of this program is an important reversal of a poorly-conceived
FHFA policy that has been in place since the government bailout of Fannie
Mae and Freddie Mac during the housing market collapse. Since then, the
agency has strictly prohibited principal write-downs on delinquent loans
because they argued doing so would create a "moral hazard."
Investors also stand to benefit from this change because homeowners who
owe less than or only slightly more than their property’s value
will be much more likely to make payments on their mortgage. Thus, investors
can make more on the net value of the recovering loan versus what they
might hope to recover through liquidation.
In order to be eligible for the new principal write down program, homeowners
must meet the following criteria:
- The must be at least 90 days behind on their mortgage as of March 1, 2016
- They must owe more than 115 percent of the value of their home
- They must have an unpaid principal balance of $250,000 or less
- They must live in the home that secures the mortgage
Keep in mind that this new rule only applies to loans that were 90 days
delinquent as of March 1,
so do not attempt to strategically default on your loan. Furthermore, if you are
currently in a loan modification,
do not stop making payments on your loan.
Sulaiman Law Group, LTD is now assisting homeowners who are interested
in this program. Call us today to learn more, as there are time limits
and deadlines. Our Chicago consumer lawyers can determine your eligibility,
guide you through the application process, and ensure that your application
receives a proper review. Even if you are not eligible, it is still wise
to consult with a lawyer before making any decisions related to your home
loan. There may be other options available that you may not have been aware of!
If you are behind on your mortgage payments and are looking for a solution
regarding your underwater property, turn to our team for the guidance
you need to get back on track.
Call us now to request your free consultation: (312) 313-1613.