About 115,000 homeowners in California alone could potentially go into default on their mortgages this year due to a recasting of private loan modifications, a California-based organization warns.
As such, the FAIR Program is urging homeowners in California who got private loan modifications in the aftermath of the 2008 financial crisis to consider remodifying their loans through the federal government’s Home Affordable Modification Program (HAMP) before it sunsets on Dec. 30.
FAIR uses HAMP guidelines to pre-qualify hundreds of homeowners for free loan modification services. To date, the company has saved more than $10 million in real estate throughout Los Angeles through its loss mitigation efforts. In January, 100% of its clients’ loan modifications were approved under HAMP.
Between 2009 and 2010, thousands of California homeowners got private mortgage modifications that are expected to reset during the next two years, the organization warns. Many of these homeowners could find themselves struggling even more to pay their mortgages as a result.
“Essentially, a homeowner with a step loan mod might originally be issued at a two percent interest rate, but in three years’ time that rate could go up to five percent, more than doubling a homeowner’s mortgage [payment],” says Eric Petz, program director at Fair Program Inc., in a statement.
FAIR estimates that up to 175,000 homeowners in California will see a recasting of their loan modifications in 2017.
“For homeowners hoping to remodify their loans, there is still time to call lenders and clarify terms or get a much needed heads-up on changes to their rates before it is too late,” the organization says in a release. “There are more than 70 approved U.S. Department of Housing and Urban Development counseling agencies in the state of California, and FAIR Program offers loan modification audits and preps free of charge to homeowners in the entire Southern California region.”