Can a Home owner Get Loan Modification Services If They Have a Jumbo Mortgage?

by | Sep 30, 2015 | Lawyers

Is it possible to obtain loan modification services if a borrower has a jumbo mortgage? The answer to that question is yes, but the process is different from a modification on a regular loan. Some may believe a modification is out of reach because they aren’t eligible for HAMP, or the Home Affordable Modification Program. Here, borrowers can learn about their non-HAMP options.

Buyers Have More Choices
While HAMP is the most well-known modification program, it is not the only available option. Most borrowers who get modifications do not do it through HAMP; instead, they do it through private negotiations with lenders. Even if a person has a jumbo mortgage, they aren’t necessarily ineligible for HAMP if they live in an area with high property values. The determining factor in HAMP eligibility is whether the mortgage “conforms”, or is guaranteed by Freddie Mac or Fannie Mae.

The upper limit on a Freddie Mac or Fannie Mae mortgage is roughly $420,000, although it was much higher in the past. Higher-value mortgages are still HAMP eligible, but only if they conformed in the start.

Private Negotiations
Proprietary, or private, modifications are negotiated between borrowers and lenders. A foreclosure is a costly proposition for a lender, and if someone is experiencing financial hardship, it’s in the lender’s best interest to work out a payment arrangement.

The Perfect Loan Modification
The ideal loan modification service will lower a borrower’s monthly payment, making it easier to stay current on a mortgage. The monthly rate lowering is done by reducing interest, extending the loan term, or doing both; in some instances, interest rate reductions are temporary, which allows borrowers to recover financially before being saddled with a high payment once more.

Negotiating with a Lender
Borrowers with jumbo loans have one big advantage in the loan modification process: foreclosures are much more expensive than with conventional mortgages, so lenders are more motivated to negotiate. However, a lender wants to be sure that a borrower can’t afford the payment before granting the modification.

Refinancing Is Still an Option
Getting loan modification services from may negatively affect the borrower’s credit because the loan obligation is not being met, and for that reason, it is best to try to refinance if a borrower needs a lower monthly payment. If a person can do so, refinancing doesn’t harm credit; furthermore, if interest rates remain low, a refinance can offer better terms than a modification can.

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