Reduction of principal mortgage balances and lower interest rates are the two primary benefits home owners are hoping for when applying for loan modification and restructuring.
The $75 billion foreclosure prevention program ,which got under way this past Wednesday, dictates that Lenders and Servicers who are participating in the program, lower interest rates to cause mortgage payments to not be greater than 31% of gross household income. A portion of the reduction is expected to be subsidized by the government. Other incentives are also being offered. The principal mortgage balance could also be reduced, sufficiently so, that the 31% threshold is realized.
Contrary to some opinions circulating in the streets, being behind on mortgage payments is not the only criterion the homeowner need have to apply - homeowners who are current on their mortgages, and who have had no late payments, can and should apply for loan modification if they can meet certain of the programs' guidelines.
What these are we will discuss in detail in tomorrows' post.
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