WASHINGTON, D.C. (Washington Post) – The federal government has placed new requirements on lenders to reduce troubled borrowers’ mortgage payments to no more than 31 percent of their income for up to six months.
Several changes have also been made to the Home Affordable Modification Program. Borrowers in bankruptcy will now be eligible for mortgage relief under the federal program. Lenders will evaluate delinquent homeowners for the program before referring them to foreclosure.
The program will lower monthly payments by reducing mortgage rates to as low as 2 percent for five years and extending loan terms up to 40 years.
To complete the program, homeowners will go through a three-month trial period and provide proof of their income, as well as a letter documenting their financial hardship.