In the past, we discussed how one can obtain a mortgage after filing bankruptcy by obtaining a Federal Housing Administration mortgage guarantee. There is good news for Las Vegas homeowners who are underwater in their mortgages: Instead of filing bankruptcy and then trying to obtain a new loan, the Federal Housing Finance Agency’s (FHA’s) Streamlined Modification Initiative can help homeowners stay in their homes and out of bankruptcy altogether. The program went into effect on July 1, 2013, so here are five things to know about it:
- Borrowers whose mortgages are owned by either Fannie Mae or Freddie Mac and are at least 90-days delinquent on their mortgages are eligible for a streamlined modification. Homeowners in those circumstances will be sent a letter offering a three-month trial payment amount at a fixed interest rate for 40 years. Some underwater homeowners might be offered principal forbearances.
- A prominent feature of the program is that it will not request documentation from homeowners specifying a hardship situation or their financial status. The FHFA believes that previous programs were less successful due to bureaucratic delays. With the Streamlined Mortgage Modification Initiative, the FHFA is trying to eliminate as many barriers to mortgage relief as possible. Simply making the three trial payments will trigger a modification offer from the servicer.
- The Streamlined Mortgage Modification Initiative will begin on July 1, 2013, and it will end on August 1, 2015, giving homeowners two years to sign on to the program.
- Other eligibility requirements apply. Homeowners have mortgages that are at least 12 months old and have a loan-to-value ratio of 80 percent or greater. They must also be delinquent for at least 90 days but no more than 24 months, and they are ineligible if they’ve already received two loan modifications.
- Homeowners who do supply more financial information and work with their servicers to avoid foreclosure may be eligible for more options.
You can find out more here. A loan modification can make the difference between foreclosure and staying in one’s home, but if it isn’t, then you should talk to an experienced Las Vegas bankruptcy attorney to assess your options.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.