Do you have a rental property with a loan that you cannot afford to pay? Have you had difficulty obtaining a loan modification for rental properties in the past? If so, don’t assume you don’t have any options available. In 2012, the federal government made changes to its modification program to include investment properties. Since over 100 lenders participate in the program, this could likely affect you. Non-participating lenders can also provide loan modification for rental properties according to their own set of requirements. To find out if your property qualifies, property owners apply for a loan modification with their current lender or loan servicing company.
Get to Know the Basics of Loan Modification:
When the housing market collapsed in 2007, loan modifications became quite popular. The government was encouraging lenders to work with their borrowers by offering lower monthly payments to decrease the number of foreclosures. The majority of loan modifications traditionally cater to homeowners residing in the home (owner-occupants), or homeowners who live in the house as a primary residence for a majority of the year. Before 2012 changes to the modification program, the owner-occupant requisite prevented homeowners from obtaining loan modifications on their second homes, vacation homes, or rental properties.
Home Affordable Modification Program (HAMP):
Property owners who do not occupy the home and operate it as an investment/rental property or who own a second home they intend to rent out could be qualifying candidates for HAMP, the government’s Home Affordable Modification Program. To qualify, the property owner must be delinquent on the payments, be experiencing documentable financial hardship, and show proof of sufficient income to support a modified payment amount. Qualifying borrowers must have loans that originated before 2009 with the loan amount for rental properties not exceeding: $729,750 on a single-unit, $934,200 on a two-unit, $1,129,250 on a three-unit, or $1,403,400 on a four-unit.
Lenders who are not participating in the government program may still offer loan modification on rental properties. The will develop their criteria for the loan modification process on their own with guidance on administering modifications from The Federal Deposit Insurance Corporation, which supervises most financial institutions.
According to the FDIC, offering loan modification to rental properties increases the probability of loan performance and preserves the community.
If you need to talk to an experienced loan modification attorney about the loan modification process or how to get a loan modification on your rental property, please contact Aronow Law PC today so we can help.