About a 11 million homes – that’s more than one in five – are underwater, meaning the owner owes more on the mortgage than what the property is worth. To assist us, the U.S. government and five of the nation’s largest banks recently announced a $26 billion mortgage settlement. The big question is, “Is there anything in there for me?”
The settlement says that it will offer relief to an estimated 1.5 million home owners. It does not currently specify how far underwater your home must be to qualify.) At least $17 billion of the assistance funds, provided by the banks, will be distributed to borrowers in the form of a principal reduction of up to $20,000 or a refinance resulting in lower interest rates. About an additional 750,000 people whose homes were improperly foreclosed on between 2008 and 2011 will receive a cash payout averaging $1500 to $2000.
Unfortunately if your loan is owned by either of the government mortgage giants, Freddie Mac or Fannie Mae, you do not quality. The settlement applies only to privately held mortgages issued by Bank of America, J.P. Morgan Chase, Citigroup, Wells Fargo, or Ally Financial. Another nine mortgage lenders are expected to join the agreement over time.
Home owners must be patient for this aid. Banks are required to comply within the next three years or face penalties, but the process is lengthy. It will take at least six to nine months to identity qualified borrowers.
To obtain this mortgage relief, you must meet the requirements. Your lender should get in touch with you. If you feel you qualify for assistance, contact your lender to see if they have any information. Also, start gathering the required paperwork – including pay stubs, tax returns, and asset statements – to expedite the process if and when you become eligible.