The economic recession has affected almost every business in America. Moreover, unemployment has rather complicated the economic status of each and every American. Accordingly, a higher percentage of Americans are struggling to pay their mortgages and are desperately avoiding foreclosure. Many observers agree that about 50% of the past loan modification plans were unfulfilled; however, the President presented a new pack of loan modification solutions that would help secure borrowers and prevent them from losing their homes.
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As a consequence to the late economic situations, many real estate properties have lost around 50% of their financial value. The process is quite simple; unemployment and other present financial problems are forcing people to move in together to save cash. Hence, more vacancies are created among rental apartments, houses and other real estate properties and this would eventually pull down the price of these buildings. On the other hand, house owners are fighting to pay their monthly mortgage fee at a value that is somehow less than the property's present value.
The new modified loan plan entails that home owners would remain in their homes as long as they are obliged to their monthly payments. However, prolonging the debt period, decreasing the interest rates and declining the monthly payment to no more than 31% of an individual's monthly paycheck are amongst the most beneficial solutions offered by the new loan modification plan. The new plan offers mortgage holders the option to receive government funds on monthly mortgages exceeding 31% of the borrower's monthly income. Funds are chipped in to bring the loan monthly payment to 31% of the borrower's income.
The administration's new loan modification plan is offering lenders and borrowers incentives to encourage them to participate in it. A mortgagee will get 1000 bucks for every modified loan executed. Moreover, borrowers are rewarded with a 1000$ cut off their loan annually, provided that they make monthly payments on time. However, loan modification is available for mortgage holders who live on their mortgage property. If occupancy is denied by the lender and cannot be proved by the borrower, the borrower loses any rights to new loan modification plans. Another smart component of the new modification plan is the net present value testing option. It allows mortgage holders to benefit from a reduction of the sum of their mortgage due to a steep decline in the value of their property.
The government has presented a pack of loan modification solutions that aim to help American mortgage payers survive an economic recession period that is amongst the worst ever occurring in the modern American history.
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