Home Affordable Modification Program

by Paul from Virginia

Kate, I've got a situation and would like to know your thoughts about the Home Affordable Modification Program. My mother is 74 years old who lives in Dallas Texas and is on Social Security and that is her only income. About seven years ago, to consolidate some debt, she took out a refinanced loan.

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It came to my knowledge that this was an ARM. This was the start to her problems. Two years ago the loan reset and they were about to charge her 11.5% interest on her loan. I had her write in for a hardship which was granted.

During that same time she filed for bankruptcy. Now that the two years is up, her loan again reset and is not at 8.5%. We are going through a heck of a time to get her payment back down.

She applied for the Home Affordable Modification Program and was declined because they said she had equity in the home. Her home appraises on the Dallas City website at $53,000 and her loan is $43,000.

They are doing another review and awaiting a BPO (Broker Price Opinion). In order to be considered they said she had to have an escrow account, in which she agreed to but now the insurance payment has doubled as a result of how they do the escrow.

With her current rent at $357 a month and her escrow at $174, this puts her closer to 50% of her income. How do I get her out of this loan and back to a reasonable rate? Should I attempt to purchase the home from her? I live in Northern Virginia.

Any good advice on this situation? We just want to make it so that she can pay her mortgage on time, as she always has, until it is paid off. Thanks, Paul

Kate Answers: Home Affordable Modification Program

Dear Paul, There is no simple or easy answer right now for homeowners caught in this dreadful cycle.

Since you are still awaiting the results of the BPO, I suggest following through with HAMP, Home Affordable Modification Program, until you have exhausted that route.

Adding property taxes and home owners insurance into monthly house payments is an option with various mortgage programs. Many homeowners prefer the convenience. Others object because they do not want to risk your mother's experience. Unfortunately, your mom was not given a choice.

You asked about buying her house. I don't know if you have the financial means but you could explore buying her house or even supplementing her income to cover the portion of the mortgage payment she cannot afford. Remember to consult an accountant and/or financial planner for advice.

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Best wishes to you and your mother,

BONUS! Mortgage Loan Modification Answers

Many homeowners are asking, "Can I do a modification myself?" The answer is yes. But ask yourself this question first. "Should I do the home loan modification myself?"

Get answers to mortgage loan modification questions here at my other website, Get-Your-Best-Mortgage-Rate where you'll find thousands of solutions for homeowners!





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