December 26, 2014
A reader asks, “I am owner/occupant of a 4 unit residential apartment Bldg which I built 37 years ago. it was successful until wacancies took over after the crash, I have funded the payments with my cash flow but it is now getting lower and lower and need my 6% reduced to the 3% rates with help i a small principal reduction.”
This falls far outside the FHA single-family home loan program. The reader doesn’t indicate in the question whether the original loan was an FHA-guaranteed mortgage or not, but in any case, a borrower who seeks a principal reduction needs to work with the lender to see if this is possible.
A refinance loan option may be possible depending on the circumstances and the lender, but again, this is a question for the loan officer.
Borrowers who have single-family FHA home loans who need principal reductions should also address this question to the loan officer, but there may be other alternatives such as the government-backed Home Affordable Modification Program established by HUD and the U.S. Treasury back in 2009.
That program recently got some modifications of its own to further assist borrowers who need it. An announcement made earlier in 2014 states that borrowers who successfully complete six years of the program may be eligible for a principal reduction as outlined in the press release HUDNo.14-150.
That release states:
“…all homeowners in HAMP will now be eligible to earn $5,000 in the sixth year of their modification, which will reduce their outstanding principal balance by as much as $10,000. Homeowners will also be offered an opportunity to re-amortize the reduced mortgage balance, which will have the effect of lowering their monthly payment. As of today, approximately one million homeowners with HAMP modifications are eligible to earn the increased HAMP incentive.”
Talk to your loan officer about HAMP and how the program may be able to help you. Or you can contact the FHA directly by calling 1-800 CALL FHA.
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