I am not sure if many of you know what the loan modification program criteria was or not, but I thought I would post it here.
I see this helping investors realize that loan modification services and mortgage brokers have a lot of motivated seller leads. As you can see with the program guidelines outlined below, that many of the people seeking a loan modififcation will not qualify. We can help them? Get the attention of the loan modification services and mortgage borkers, so they will send you motivated seller referrals.
Here is an outline of what the loan modification program criteria consist of:
The loan-modification program was set up in 2008 by the Obama administration, and was designed to help homeowners who were having trouble paying their mortgages, to renegotiate the terms of the loan with the lender.
The formula for modification was that the bank would first lower the interest rate (down as low as 3%).
Then, if necessary, it would extend the term of the loan, (i.e., from 30 to 40 years).
And then, if even more action was necessary, the lender would reduce the principal amount owed.
The borrower would have to meet certain criteria, such as having a housing-to-income ratio of no more than 31% after the modification. Then they are required to make three monthly payments post-modification, in order for the modification to become permanent.
So, for example, if the household income was $5,000 per month, the total monthly housing expense could be no more than $1,550, or 31% of the monthly income.
The adjusted rate and monthly payment amount would be fixed for five years, and then the interest rate would step up gradually in year six, increasing by one percentage point per year until reaching the Freddie Mac Weekly Survey rate cap.
By year six, with a lower principal balance, each year's interest-rate adjustment would not raise the payment by too much much more than the starting balance.
I hope this helps some. There are a lot of referrals sitting out there. Unfortunately, there are more people who do not qualifty for this program then who do qualify. Even still, there are a lot of people who only qaulify for short term loan modifications and not permanent ones.
Network and get the deals!!!
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