We represent homeowners seeking loan modifications on their mortgages. The paperwork can be confusing and time-consuming. Call us today at (813) 282-9330 or email us at [email protected] to talk about your loan modification.
Today, approximately 1.75 million Americans remain in forbearance, while another 1.8 million Americans are delinquent on their mortgages. The fallout from COVID-19 may not be fully known for many years to come but market conditions are significantly different from the Great Recession. There are two main differences we see in the market place. First, many Americans have equity in their homes. The median sales price for a home in Florida in June 2021 was $345,000. The average homeowner looks to have between $30,000 - $50,000 in equity in their home. Second, the federal government has offered deferrals and forbearances to homeowners during COVID-19 and now has come out with a number of loan modification programs for federally backed loans. Here is a summary of programs currently being offered.
FEDERAL HOUSING ADMINISTRATION (FHA)
Extended Single Family Foreclosure and Eviction Moratoria
FHA has extended its foreclosure moratoria for all FHA-insured single family mortgages through July 31, 2021. First legal action should not occur for 180 days after July 31, 2021. This window is crucial for homeowners looking for loan modifications, this is the time servicers will focus on modifications and not on foreclosures.
Extended COVID-19 Forbearance Request Timeframes
FHA is extending the time for homeowners to request new forbearance plans to September 30, 2021. If you haven't previously been in a COVID-19 forbearance you can still request a forbearance which may pause or reduce mortgage payments. FHA homeowners applying for the COVID-19 Forbearance between July 1, 2021, and September 30, 2021, may receive up to six months of relief from payments.
Homeowners who have already received their forbearance between July 1, 2020, and September 30, 2020, may be eligible for an additional three-month forbearance extension of their forbearance.
COVID-19 Advance Loan Modification
FHA has introduced a new loan modification program they call the COVID-19 Advance Loan Modification (COVID-19 ALM). COVID-19 ALM is supposed to offer payment relief to eligible homeowners. COVID-19 ALM is for borrowers who are 90 or more days past due on their mortgage when their forbearance ended. This program is designed top bring homeowners with a 30-year mortgage current and should reduce principal and interest by at least 25 percent.
Home Equity Conversion Mortgage COVID-19 Extensions
For seniors with Reverse Mortgages affected by COVID-19, you can request an extension to prevent servicers from calling your loan due. Extension requests can be made between July 1, 2021 and September 30, 2021 and once an extension request is made servicers must grant homeowners the extension for up to six months.
If your Reverse Mortgage has been called due, servicers must approve homeowner requests for an extension for any foreclosure or claim deadline related to foreclosures which will extend any deadlines by six months. These extension requests must be made between July 1, 2021, and September 30, 2021.
If you already received an extension between July 1, 2020, and September 30, 2020, you can request one additional three-month extension.
FANNIE MAE FLEX MODIFICATION
Fannie Mae borrowers experiencing permanent or long term hardships may be eligible for the Flex Modification program which extends the mortgage term to 480 months and targets a 20% principal and interest reduction. Flex Modifications may also allow interest rate reductions.
Determining Eligibility for a Fannie Mae Flex Modification
1. The mortgage in question must be a conventional first mortgage.
2. The homeowner must be at least 60 days past due or the servicer has determined that the homeowner is in imminent default in accordance with D2-1-01, Determining if the Borrower's Mortgage Payment is in Imminent Default.
3. The mortgage must have been originated at least 12 months prior to the loan modification evaluation.
4. The mortgage must not be subject to an approved bankruptcy liquidation workout option, an active forbearance or repayment plan, a current offer on a loan modification, or performing under an active loan modification trial period plan.
5. If the homeowner has modified the mortgage three or more times previously then they are not eligible for Fannie Mae Flex Modification.
6. The homeowner must not have failed at paying a prior Fannie Mae Flex Modification Trial Period Plan within 12 months of being evaluated for another Fannie Mae Flex Modification.
7. If the homeowner received a Fannie Mae Flex Modification and became 60 days or more delinquent within the first 12 months of the effective date of the mortgage loan modification and was not reinstated then they are not eligible for this modification plan.
FREDDIE MAC FLEX MODIFICATION
The Freddie Mac Flex Modification provides eligible homeowners options to resolve delinquencies and maintain their home ownership. Some interesting notes on The Freddie Mac Flex Modification program include the fact that if you are delinquent 60 days or more then you may eligible for a modification on your homestead, second home or vacation property. Moreover, if you are current, but facing imminent delinquency or less then 60 days delinquent then you are eligible to apply for this modification on your homestead. So options are available for homestead and investment properties.
The Freddie Mac Flex Modification has more moving parts depending on the type of home, type of loan, home-to-income ratios, and length of delinquency. For more information you can reference The Freddie Mac Flex Modification Reference Guide.
VETERAN'S ADMINISTRATION (VA)
The VA’s COVID-19 Refund Modification claims to give homeowners the chance at up to a 20% reduction in monthly principal and interest. One interesting program offered by the VA is the COVID-19 Refund option. Under this option the VA can purchase the homeowner's COVID-19 arrearages (and possibly additional principal amounts) from the servicer. The COVID-19 Refund will be established as a junior lien, payable to VA at 0% interest. Additionally, homeowners may be eligible for significant reductions of monthly payments as servicers can modify the loan by adding up to 120 months to the original maturity date.
UNITED STATES DEPARTMENT OF AGRICULTURE (USDA)
The USDA COVID-19 Special Relief Measure goal is help borrowers get up to a 20% reduction in their monthly principal and interest payments. This plan provides potential options such as interest rate reductions, term extensions, and a mortgage recovery advance, which may help cover past due mortgage payments. USDA will first evaluate borrowers for interest rate reductions and if that isn't enough then USDA will consider a combination rate reduction and term extension. When combination rate reduction and term extension isn't enough to get a 20% payment reduction for the borrower, a third option that combines a rate reduction and term extension with a mortgage recovery advance may be used to get the target payment down by 20%.