There are some distinct differences between the older loan modification and the most recent mod. There are still many details that are being worked out as the loan modification process continues with the different mortgage lender. However, there are a lot of outlines to the plan that are visible.
The earlier modifications were either a regular loan modification or a stream line modification. The stream line modification is the faster modification process with less benefits when compared to the regular modification. The stream line process is designed to adjust variable mortgage rates that are getting ready to adjust upwards. Right before the adjustment is fixing to occur; the interest rate is set back to the original, teaser rate that the mortgage started out with. The homeowner would be happy to stay at their original entry interest rate, but this option is just a quick fix for everyone involved. It normally takes about 30 days to do. You can try to see if your lender still has this option available due the continuous evolution of the loan modifications available.
The regular modification works on adjusting fixed and adjustable rate mortgage(ARM) . This is considered to be a more desirable form of modification with more benefits, besides just keeping an ARM loan from moving up and resetting the interest rate it has more to it. For example, a homeowner wanting to modify might end up getting their ARM loan set to a fixed rate loan , and the lender might take this option even further by lowering the principal balance; even though it is not too common to have the principal balanced lowered in some cases depending on the lender, they may take a percentage off the principal balance. This modification takes about 2-4 months to complete, and was publicized during the Bush Presidency. However, some mortgage companies have been doing this type of modification long before the announced was made publicly by the Bush Administration. Lenders have been modifiying mortgage payments for some time time; but it has not been too popular since our mortgage industry was recently booming but the mortgage bust.
One of the latest loan modification program came out to the public on March 4th, 2009 under President Obama, which is called The Homeowner Affordability and Stability Plan. This modification seem to have evolved, probably into the best mortgage modification program currently available. Believe me, there are many more loan modification programs coming down the pipeline soon. There are some restrictions that apply though. There are no "gray areas" for these qualifications; you either qualify or you do not qualify for this program. Also be aware, qualifying does not guarantee a homeowner a mortgage loan modification; It simply means that a qualified homeowner meets the requirements necessary to move forward and possibly have their house payments permanently lowered. A modification will end up saving the borrower an extra ordinary amount of money over the life of their loan. With this modification some interest rates are said to be going down to as low as 1.5 % fixed interest rate on a 15 or 30 year mortgage for some homeowners, primarily those with a Fannie Mae or Freddie Mac Backed loans that may end up getting their loans completely refinanced through this new program. Just follow up with your Lender for developments.
