In 2010, Fannie Mae and Freddie Mac began offering HAMP loans to homeowners who defaulted on their mortgage payments or were dangerously close to defaulting, as a way to avoid foreclosure. These loans offered temporarily reduced payments, usually by lowering the interest rate for a five-year period. This would allow homeowners enough time to get back on their feet. At the end of the five years, however, the interest rate would rise again. For many, this significant increase is not yet affordable, and thus has become a major concern for many homeowners and analysts.
In 2010, it was assumed that five years would be enough time for families to recover from the recession. However, the employment rate in Miami-Dade still remains lower than the national average, and the principal amounts for the mortgage loans are still relatively high. These two factors allude to the fact that many homeowners who received HAMP loans five years ago will not be able to afford their mortgage payments, once the interest rate is increased.
To address this issue, Fannie and Freddie have made updates to their policies to address the interest rate increases for struggling homeowners with HAMP loans. The revision stipulates that servicers must evaluate these loans and actively reach out to borrowers in order to offer a streamlined loan modification, in lieu of the step-rate loan they currently have.
Servicers are required to begin this process as of July 1, 2015, though they are encouraged to begin as soon as possible. The servicers are required to send at least one solicitation informing them of the update no later than 15 days after the eligibility evaluation, if that particular modified loan is determined to qualify.
If you have any questions about your modified loan or would like to know if you’re eligible for a modification, call the Graham Legal team so that we may help assess your options. Our Miami foreclosure attorneys can help during any part of the foreclosure process, from when you first default to anywhere in between.