Government Mortgage Help Plan has been created by the United States government to offset the destabilization in financial system. The mortgage meltdown has created overall financial instability and has left millions at the doorstep of foreclosure. Many people have become homeless and this has severely damaged the economy. But help is still available for those who are at risk of losing their homes. The historic crisis of 2007 and 2008 has caused thousands of loan modification companies to come forward and help the struggling homeowners. This article take a closer look at what all can be done to take advantage of government mortgage programs.
Mortgage crisis is basically a result of defaulting on mortgages by homeowners, and as a result, losing their homes. The common mortgage programs have been specifically designed to address the growing number of foreclosures that are happening all across the country. According to FDIC Chairman, in absence of a significant government homeowner aid package, the mortgage meltdown may even cause four to five million foreclosures. The homeowners plan is made to put some direction and structure to the loan modification process, which until now has been largely unstructured.
Function Of Mortgage Programs
There are many homeowners who are not sure of the procedure by which the mortgage can be modified. According to the program, if you’re eligible for the mortgage help, your lender should be able to work out a lower payment such that you have to pay not more than 30 percent of your monthly household income. The government has also offered another 7 percent subsidized reduction so that the mortgage payment comes down to 31 percent of your total monthly household income.
Types Of Mortgage Programs
There are different kinds of mortgage help programs. The most common method is asserting on reduction of rate of mortgage so that a lower monthly payment can be achieved. According to the Hope for Homeowners plan, the rate of interest can be lowered up to 2 percent in order to reach a lower monthly payment. According to another program, the principle is reduced so that the homeowner pays significantly less balance as compared to what is owed as a loan.
The average time frame for loan modification is from 60 to 90 days, whether it is done through a government mortgage help plan or independently through a bank. In this time, the process of foreclosure is halted and modification eligibility is determined.
The loan modification industry is undoubtedly a loosely regulated sector. There are many states that do not have specific rules according to which a person is termed as eligible. Because of this, there are countless situations where a desperate homeowner has been preyed upon by deceitful individuals. It is recommended that the mortgage help seeker should first find out all the information relating to mortgage help plans and the procedure of application. There many websites that provide valuable and free guidance on how to take part in government mortgage help plans.