The number of delinquent mortgages skyrocketed during the economic recession that began in 2008. The same year, the Federal Housing Finance Agency (FHFA) implemented a simplified loan modification program. The FHFA's aim is to reduce the number of foreclosures and get homeowners financed with mortgages they can afford.
The streamlined loan modification program changes existing terms to the original mortgage such as interest rate, maturity date or unpaid balance, helping homeowners refinance with terms that will help avoid foreclosure.
Less documentation is required for processing a streamlined loan modification, thereby reducing the time required for approval of loans.
With a streamlined loan modification, an affordable monthly payment plan is defined as that which does not exceed 38 percent of the monthly gross income for the household. If the homeowners are still unable to afford their monthly payment, their case can be reviewed and their payment may be lowered.
To be eligible for a streamlined loan modification, homeowners must have missed three consecutive payments.
A streamlined loan modification can help homeowners avoid foreclosure and remain in their homes. Homeowners must be able to afford the payment decided upon in the loan modification agreement.
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