08 Mar 09 Loan Modifications Help Keep Homeowners Away from Foreclosure

New federal program aims to help those with no equity, or borrowers who are delinquent on their first or second mortgages. In some cases, the borrower may behind on both 1^st and 2^nd loans.

Understanding mortgage loans can be confusing enough, and now comes a new maze of incentives, eligibility requirements and loan workout options under the recently announced two-pronged federal program to rescue troubled homeowners. The new federal Making Home Affordable program is aimed at helping homeowners who are current but have little or no equity in their homes by refinancing their loans, and at delinquent or at-risk borrowers by restructuring their home loans.

What happens in a mortgage refinancing or loan modification is contingent on three factors: The modification rules set for lenders and loan servicers who join the federal program; the homeowner’s circumstances, such as family hardships; And the mortgage lender, investor or loan servicer, who has some leeway and incentives in deciding on changes to the loan. Article written BY ELLEN YAN