The government has introduced an FHA loan modification program with these key features and differnces:
- Incentives: Incentives to the lender to modify under the program are up to $1250.00
- Principal Reduction: Under the FHA plan, mortgage servicers can reduce the amount of principal on which the borrower must make loan payments by as much as 30% to get the payments at affordable levels. The borrower makes the reduced payments for the life of the loan, but is responsible for the full loan amount when the home is sold or the loan is refinanced.
- Missed Payment Requirement: Homeowner‘s must have missed at least one payment in order to apply for the program
- Thirty-One Percent Goal: The FHA plan has the same 31% of income goal as the non FHA program. This rule pertains to the mortgage exceeding 31% of the homeowner’s gross income.
