Millions of people in the United States are facing a difficult situation in that they are having serious problems with their mortgages. The foundations for these problems are numerous in nature, but a few of the common causes of mortgage difficulties include:
- The home has declined in value, creating a situation where the homeowner owes more than the home is currently worth.
- The homeowner is behind on payments because he or she lost a job or suffered a medical setback.
- The original mortgage agreed upon had an adjustable rate, and that rate is about to change, creating a much higher and unaffordable monthly payment.
If you find yourself in any of these situations or others, you need to make sure that you seek professional help to get the problems corrected before they get worse. Ultimately, if you do nothing, you could face a foreclosure. Below is a brief overview of the mortgage modification issue in Arizona.
When one looks at the basics, it's easy to see how this has become such a wide-ranging problem. In Maricopa County alone, the number of foreclosures jumped from just under 9,000 in 2006 to almost 61,000 in 2008. Clearly, this is a trend that's troubling, but there could be options available to you.
Public Policy Impetus
The President of the United States has recently unveiled a program that's designed to help approximately 9 million homeowners in the United States who may be in trouble with their mortgages, and one of the three components that that specifically targeted are those who are upside down on their mortgages and facing foreclosures. This program is known as the Homeowner Affordability and Stability Plan, and it's been funded with $ 75 billion. While the guidelines for qualification for a modified mortgage are generally, the following represent some of the starting points:
- Those eligible must have a high level of combined mortgage debt compared to income. Those who qualify could have their monthly payments reduced to 31% of their monthly income.
- If 'other' debt that includes car payments and unsecured debt is over 55% of a borrower's income, he or she may be required to seek credit counseling before receiving help. This reduction will generally stay in place for five years and then gradually move back towards market levels.