Friday, August 30, 2013

I previously talked about the Streamlined Modification for mortgage holders who are delinquent in their payments by 90 days to 24 months. But there are many other options for homeowners in various other situations, who are looking to lower their payments or get out of rough financial waters.

Knowyouroptions.com, a site operated by Fannie Mae, lays out the following options for homeowners:

Refinancing - A new loan, with new terms, interest rates and monthly payments, which completely replaces the current mortgage. Even if a home value has decreased or the owner owes more than the home is worth, they may be able to refinance their loan as part of the government’s Home Affordable Refinance Program (HARP). HARP makes payments more affordable by lowering the interest rate or adjusting the terms of a loan, and it creates no negative activity or event on your credit history.

Repayment plan - An agreement between the owner and the mortgage company that lets them pay the past due amount - added on to the current mortgage payments - over a specified time period to bring the mortgage current. The reayment plan resolves the delinquency; lets homeowners catch up on past due payments over an extended period of time; and is less damaging to a credit score than a foreclosure

Forbearance - An offer by a mortgage company to temporarily suspend or reduce the monthly mortgage payments for a specified period of time, providing a homeowner time to improve their financial situation. This option is less damaging to the credit score than a foreclosure

Modification - An agreement with a mortgage company to change the original terms of a mortgage - such as payment amount, length of loan, interest rate, etc. Candidates may also be eligible for the government’s Home Affordable Modification Program (HAMP).

Deal for Lease - A program that allows the homeowner to temporarily lease the home by transferring the ownership of the home to the mortgage company (called a Deed-in-Lieu of Foreclosure) in exchange for a release from the mortgage loan and payments. the former owner can then rent the property back - at an affordable rate - and remain in the home as a tenant.

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