Delinquent homeowners are in for a reality check as Fannie Mae cracks down on lenders who are not pursuing collection on bad mortgage debt. Even those borrowers who have been living in their home for many months without making payments and have been in loan modification limbo will soon be finding themselves under a new time constraint. Lenders will now be fined if they cannot prove to Fannie Mae why the mortgage debt is not being collected and had better be able to provide documentation on the file. This means a new urgency for lenders and borrowers to find a solution to delinquent mortgage payments.
Loan modifications have been taking many months to review and in most cases are not successful. This is partly the blame of the lenders for being understaffed and overwhelmed, but also due to homeowners not understanding how to apply correctly. During the review process, lenders have allowed homeowners to remain in the property without making any payments at all. This is great for the borrowers, but Fannie Mae is tired of these non-performing loans and is demanding results. This means that homeowners could not be facing some tough decisions as their banks will either decide to modify their loans or move them to short sale or foreclosure.
This could actually be good news for homeowners as it will be much more likely to get a loan modification answer quickly once you prepare and submit your accurate application. Remember, that only those borrowers who can prove they fit into the guidelines will be offered a loan workout to lower their mortgage payment. This could mean that all of the past due payments will be included and all late fees and penalties will be waived. This is the best way to get a fresh start on the mortgage and start making payments on time again. Those homeowners who do not submit an acceptable application will be notified and given the option to short sell, sign a deed in lieu or the home will go to foreclosure.
What effect will the new Fannie Mae procedure have on delinquent homeowners? Well, it could be very good or it could be very bad. The very good option will be a loan modification that will be offered quickly once the application is accepted. The very bad option could be that the loan mod is denied and the home will be moved to short sale or foreclosure. The way to give yourself the best chance of a loan modification is to prepare and submit your application correctly making certain that you fit into the guidelines. A software program that will help you may be a good way to be certain that your application is accurate and acceptable.
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