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Flexible mortgages help debt problems

Britons are feeling particularly positive about flexible mortgages at present, as they see them as a good way to ward off debt problems. This is ...

Here are tips on how to adopt HAMP's mortgage modification replacement

Prior to the 2007 crisis, custom mortgage loan modifications were offered in certain cases, but they were left to the discretion of the loan servicer. Some have characterized this period as the “Wild West” of loss mitigation. There wasn’t always an appropriate level of investment to make the gathering of updated information about the borrower an efficient task, and the re-underwriting of the loan was equally challenging. In addition, the rapid rise in home prices in the early to mid-2000s meant borrowers with financial troubles could simply tap equity for relief.

Then the crisis hit. Nothing on such a scale had challenged loan servicers before, and the discretionary process was no longer viable. One result was the Home Affordable Mortgage Program  – a more standardized, measurable approach servicers could follow and have some guarantee of safe harbor, with all servicers taking the same actions, using the same calculations and resetting loans with hopefully satisfactory outcomes for borrowers in dire financial straits.

Flex Modification: An outline of HAMP's replacement

The Home Affordable Modification Program (HAMP) comes to a close on December 31, 2016.

A replacement program is set to begin, called Flex Modification. As with HAMP, it will be available for loans owned or backed by Fannie Mae or Freddie Mac.

However, it may be some months until the new program is fully in place; new hardship cases can be submitted to Fannie or Freddie as early as March 1, 2017 (possibly sooner, if the GSE's software is updated more quickly) but lenders aren't required to be fully up to speed until October 1, 2017. Until then, servicers will generally use existing guidelines from Fannie Mae and Freddie Mac in dealing with troubled borrowers.

Flex Modification combines featured of three programs: HAMP, Fannie/Freddie's "Standard Modification" and "Streamlined Modification" programs.

As with HAMP, homeowners having trouble making mortgage payments are encouraged to engage their servicer as soon as they can. Flex Mod allows a homeowner to start a modification process before the loan is even as much as 90 days late by requesting and completing a Borrower Response Package (BRP). Homeowners must request these from their mortgage servicer; typically, the servicer's contact information can be found on the homeowner's mortgage statement. This begins the process.

Who should get a flex pay mortgage loan?

So my husband and I have found a home that we really love but its out of our price range at the current moment. I have a job in September on hold when I graduate from college and we will be able to afford the house then, but it will probably be gone.

Those loans are generally gone. They are certainly gone if you also don't have a down payment.

The reason they are gone is that they were too high risk for the average person to correctly handle.