Wednesday, April 21, 2010

Lots of Loan Modification Options

First it was HAFA then came HAMP and now we have 2MP

The government’s second-mortgage program, called 2MP, offers incentives to borrowers, mortgage servicers and investors to modify second mortgages. How it works:

When a borrower’s first loan is modified under the federal program, known as the Home Affordable Modification Program (HAMP), and the servicer of the second loan is also a participant in HAMP, that servicer must offer to modify the borrower’s second lien.

  • Servicers can stretch the term of the second loan to 40 years.
  • Second-lien lenders must defer the payment of the same proportion of principal that was deferred or forgiven on the first loan.
  • The second loans also must have originated on or before Jan. 1, 2009, to be eligible for a modification.
  • Modifying a mortgage with a second lien can be more difficult because of the additional parties involved.

A second lien may be held by another servicer or investor, and getting all parties to agree on interest rate reductions or other steps to ease borrowers’ monthly payments can be time-consuming or difficult. The government program aims to make the process easier, offers incentives to borrowers, mortgage servicers and investors to modify second mortgages.

How it works:

When a borrower’s first loan is modified under the federal program, known as the Home Affordable Modification Program (HAMP), and the servicer of the second loan is also a participant in HAMP, that servicer must offer to modify the borrower’s second lien.

  • Servicers can stretch the term of the second loan to 40 years.
  • Second-lien lenders must defer the payment of the same proportion of principal that was deferred or forgiven on the first loan.
  • The second loans also must have originated on or before Jan. 1, 2009, to be eligible for a modification.
  • Modifying a mortgage with a second lien can be more difficult because of the additional parties involved.

A second lien may be held by another servicer or investor, and getting all parties to agree on interest rate reductions or other steps to ease borrowers’ monthly payments can be time-consuming or difficult. The government program aims to make the process easier.

List of Participating Servicers (more to follow as they join)

  • Bank of America (including Countrywide)
  • Citi Mortgage, Inc.
  • Chase (including EMC and WaMu
  • Wells Fargo (including Wachovia)
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