Philadelphia Mortgage Modifications

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Philadelphia Mortgage Modifications

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Philadelphia Mortgage Modifications

There are several options available to homeowners that are delinquent on their mortgages.  Often times a hardship such as unemployment, reduction in income, divorce or separation or unanticipated expenses lead to a late or unpaid mortgage payments.  When such a hardship occurs a mortgage modification may be a viable option, especially if other debts (credit cards, vehicle payments, etc.) are substantially current or non-existent.

 

In response to the recession, in 2009 the Obama administration established the Home Affordable Modification Program “HAMP” to prevent millions from losing their homes to foreclosure.  On December 31, 2016 HAMP expired and was replaced by the Flex Modification Program “Flex.”  The Flex program was designed to combine the best features of HAMP, Fannie/Freddie Mac’s Standard Modification and Streamlined Modification Programs.

 

The goal of the Flex program is to reduce mortgage payments by as much as 20%  per month, lower the contractual mortgage interest rate and forbearing principal balance.  Generally speaking to accomplish a reduction in mortgage payments, the mortgage term need be extended to 40 years to satisfy the unpaid principal balance of the subject mortgage.

 

For loans that are not serviced by Government Sponsored Entities “GSE’s”  or conventional mortgages, the mortgage servicers often have their own modification guidelines.  Although the guidelines will vary by servicer the concepts of a reduction in monthly mortgage payments, reduction of interest rate and extension of loan term are the universal goals of a mortgage modification.

 

The mortgage modification process is fairly paperwork extensive and may take between three and six months.  Once approved for a modification, there is a three month trial plan.  During the trial plan, the mortgagor must make three monthly trial payments in a regular and timely manner before a permanent mortgage modification is agreed to and signed by the parties.

 

Although a mortgage modification can be beneficial, the total amortization of the loan can increase the amount due to the servicer over the life of the “new” modified loan.  Further, the unforgiven and unpaid principal balance can impair a homeowner’s equity position as well.

 

To determine if a mortgage modification is a viable option for your situation, please contact the attorneys at Sadek and Cooper to best assess your situation.

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