The Department of Housing and Urban Development announced today that struggling borrowers with FHA loans may now be eligible for assistance via the Making Home Affordable program.
The new “FHA-Home Affordable Modification Program” aims to make monthly mortgage payments more affordable through the use of a partial claim, which defers the repayment of mortgage principal through an interest-only subordinated lien.
Borrowers up to 12 months in arrears may be brought current through buy downs of up to 30 percent of the unpaid principal loan balance; the target front-end debt-to-income ratio will be 31 percent.
Loan servicers will receive incentive payments of up to $1,250 for taking part, $500 for the partial claim and $750 for the loan modification.
“Today, we’re bringing another important tool to the table to help struggling families who are desperate to keep their homes,” said HUD Secretary Shaun Donovan, in a statement.
The Making Home Affordable program, first announced by the Obama Administration back in February, has carried out roughly 200,000 trial loan modifications since inception.
FHA borrowers are expected to be able to apply for assistance beginning August 15 and should contact a loan counselor to determine eligibility.
Let’s hope this goes better than the Hope for Homeowners program, which supposedly helped just a single borrower.