5 Mortgage modification rules that you should know

The government has announced new mortgage modification rules so as to help those homeowners who are unable to pay the mortgage interests. The purpose of the new rules is to help the distressed home owners avoid foreclosure.
Mortgage modification rulesThe 5 mortgage modification rules that you should know are given below:
1. Forbearance: The HAMP (Home Affordable Modification Plan) program has included forbearance option for the people who has lost their job. The unemployed persons can avoid foreclosure with the help of fobearance option. Forbearance is an alternative payment plan where the lender can postpone the monthly mortgage payments by six months. The lenders will receive incentives on approving the forbearance applications of the borrowers.
2. Underwater: The borrowers whose loan amount is more than the value of their house can get mortgage modification help. They can get refinance loan from FHA (Federal Housing Administration). However, the borrowers can qualify for this loan only when the lender consents to lower the principal amount by 10%. This is done so that the loan-to-value ratio is not more than 115%. The lenders will get incentives for approving refinance loans.
3. Proof of income: The borrowers have to show their income proofs and tax return documents while applying for mortgage modification.
4. Quick response: Banks have to respond within 10 days to a mortgage modification request. They have to give a receipt to the borrower so as to prove that they have received the mortgage modification application. Banks have to accept or reject the application within 30 days.
5. Qualification: According to the new rules, not all the borowers can qualify for this program. The borrowers can qualify for mortgage modification under the following circumstances:
• The monthly mortgage payment of the borrower is not more than 31% of his gross monthly income.• The property is his principal residence.• The loan amount is at least $729,750.• The borrower is going through a financial hardship.• The borrower has to convince the lender that he will able to make the mortgage payments henceforth.
These are the 5 new mortgage modification rules that government has introduced. These new rules can help the borrowers to avoid foreclosure.
Tax Return Accountant: Our qualified income tax advisors and tax return accountants can assist you with your personal tax investigation, VAT returns and income tax liabilities