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Loan modifications under HAMP may soon begin expiring

Homeowners will likely be hit with higher mortgage payments after expiration of loan modifications that were granted during the housing crisis. As the first of the federal Home Affordable Modification Program options were granted in 2009, many of these loan modifications will expire this year.

The costs for Florida homeowners could be enormous. These individuals could see increases of as much as $1,168 as interest rates grow by approximately one percent each year. These increases could continue until interest rates reach the level for which the loans were modified. The median increase is expected to be at $162 per month.

Those that received the earliest modifications are expected to see the highest increases. This is because the interest rates were the highest at that point before the loan modifications took place. The median interest rates on these loans with modification expiration dates were 6.4 percent before the modifications.

We are in circumstances where many individuals are still losing their homes or are about to default upon their loans. These individuals will be looking for other options including loan modifications. The restructuring of loans will often involve a great deal of paperwork and negotiations for a new rate that is manageable.

Attorneys familiar with foreclosure alternatives do wish to make homeowners aware that HAMP is not their only option concerning loan modifications. These attorneys can sometimes work directly with the banks to create a suitable modification that will allow individuals to stay in their homes. In the long run this may be preferable for both the homeowner and the lending institution.

Source: Palm Beach Post, "Florida loan modifications set to expire beginning this year," Kimberly Miller, May 5, 2014

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