Loan modification rules Essay Example | Topics and Well Written Essays - 500 words

Loan modification rules - Essay Example The Home Affordable Modification Program The Home Affordable Modification Program is intended to help as many as 3 to 4 million economically stressed homeowners prevent foreclosure by altering mortgage loan payments that is reasonable (â€Å"Home Affordable Modification Program†). The program attempts to alter the mortgage payment to 31% of the homeowner’s monthly income. Reducing the mortgage payment to 31% of pretax income is achieved first by having the interest rate for the mortgage decreased to as low as 2%. The second step will be to lengthen the term of the loan to 40 years and if the payment still has not reached the targeted threshold, the lender can withhold principal and charge interest on a part of the loan. Qualifications The qualifications to decrease the monthly mortgage payment to 31% of the homeowner’s income are uniform throughout the mortgage industry. The Home Affordable Modification Program offers homeowner’s mortgage payment changes i f they are have trouble making mortgage payments because of a hardship.