In a struggling real estate economy, many people may have a difficult time continuing to pay their current mortgage. When you borrow money, you enter a contract with the lender and agree to the terms. Sometimes, a person tacitly agrees to highly unfavorable terms in order to borrow money.
After the real estate bubble burst in 2008, the Federal government stepped in to help homeowners in financial turmoil who were facing foreclosure. The government created a loan modification program known as HARP. The program was a collaborative effort between banks, credit unions, services, and federal agencies to assist homeowners by modifying agreements to allow the homeowners to keep their property. HARP sets forth guidelines, procedures, and eligibility criteria to determine who qualifies under the program.
A borrower may be able to qualify for loan modification, which would result in a permanent amendment to the terms of the original loan that the borrower and lender entered into. It can also lower the amount of payment, allowing the borrower to afford the payments more easily.
Many types of modifications may be available to the borrower. Some loan terms of the mortgage that can be adjusted include a variety of reductions such as in interest rate, principal, monthly payment, penalties, and late fees. The modification could also change the term of the loan, allowing the borrower more time to pay, or setting a maximum amount of monthly payment in proportion to the annual household income of the borrower. Other options may be available at the lender’s discretion.
Before entering into any modification agreement, it is important for homeowners to protect themselves from the myriad of scammers out there looking to make a quick buck. There are many trusted authorities in the industry, and homeowners should conduct thorough research before signing any binding agreement.