Helping New Jersey Families with

Mortgage Foreclosure and with Banking

In May, President Obama signed into law the Helping Families Save Their Homes Act of 2009.  As its name suggests, this law includes several provisions to help distressed homeowners.

Loan modifications and short sales

Homeowners with financial woes often ask lenders to modify their mortgage loans.  A modification is a permanent change that results in a lower interest rate, a maturity date extension, a change from an adjustable to a fixed interest rate, a reduction of principal, or some combination of these features.  Alternatively, troubled homeowners may request a lender’s permission for a short sale.  That’s a transaction in which the house is sold and the lender receives less than the outstanding mortgage balance.

Under the new law, mortgage companies must modify existing loans or approve short sales in specific situations.  In essence, the requirement takes effect if a foreclosure is likely and the mortgage company would recover less from a foreclosure than it would from a loan modification or short sale.  This provision applies only when the borrower occupies the home as a principal residence.

A better law for homeowners

In 2008, Congress passed a law that included a HOPE for Homeowners program.  Under this program, lenders would replace existing mortgages with new 30-year, fixed-rate loans for 90% of a home’s appraised value in order to avoid a larger loss in a foreclosure.  The program resulted in very few refinanced mortgages because it had intimidating red tape and eligibility requirements.  Under the new law, mortgage companies will receive more compensation from the federal government for completed transactions, and homeowners will incur lower costs.

Tenant protection

In some cases, lenders who have foreclosed on rental properties have evicted tenants even though they have been meeting their obligations.  Now, lenders who foreclose on rental properties must allow tenants to occupy the property until the home as his or her primary residence, the new owner must give the tenant at least 90 days notice before forcing the tenant to leave.

Borrower notification

Many home mortgage lenders sell their loans to investors, who may resell those loans.  The recently passed law requires the new mortgage owner to notify the borrower within 30 days after the sale of a mortgage on a primary residence.  That’s true even if the company servicing the mortgage remains the same.

If you have any questions, contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291, or fniemann@hnlawfirm.com.  He is happy to answer your inquiries.