If you have an Adjustable Rate Mortgage (ARM) or an otherwise bad mortgage loan, you may want to see if you are eligible for Streamlined Mortgage Modification Program (SMP). If you are not in bankruptcy, this program may help you. Hopefully Congress will see the light this spring, and change the Bankruptcy Code so that bankruptcy judges can modifiy mortgage loans for people that are in bankruptcy.

The new SMP covers mortgages owned by Fannie Mae and Freddie Mac. Mortgages with the FHA, VA and RHS are not eligible under this program. A homeowner’s mortgage may be in foreclosure but the borrower may not be in an active bankruptcy. A mortgage that was modified previously is eligible.

Who Is Eligible?

On December 18, 2008 the Federal Housing Finance Agency, Fannie Mae, Freddie Mac and Hope announced their Streamline Modification Program (SMP) to assist troubled homeowners. By implementing common standards and procedures for loan servicers to follow it is expected that the process will expedite the process of modifying a mortgage loan for a troubled homeowner.

Am I eligible for assistance under the new Streamlined Modification Program (SMP)?

If the answer to all of the following questions are YES, you may qualify for assistance under the new Streamlined Modification Program (SMP).

Is your mortgage principal equal to or greater than 90% of your home’s market value?

Is your home a single family residence or condo?

Is the single family residence or condo your primary residence?

Is your mortgage past due by 3 months or more?

Is there a financial hardship that caused you to become late with your mortgage?

Did you take out your mortgage before January 1, 2008?

Can you verify your income?

Is your current monthly mortgage payment (including taxes and insurance) greater than 38% of your gross monthly income?

If you answered yes to all of the above questions you probably qualify for assistance. Even if you think you may not be qualified, you should still call your loan service provider, who will try to arrange an affordable monthly mortgage payment. The Federal Housing Finance Agency states that “The key to success is the borrower’s ongoing cooperation and communication with the (loan) servicer”.

Other Considerations

The loan servicer’s phone number is usually listed on your mortgage statement. In addition, the participating loan servicers in the SMP will attempt to contact delinquent borrowers by phone and mail.

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization