Alternative Modification Programs Gaining Traction

Struggling borrowers in need of alternative home loan modifications are getting a helping hand from a Texas-based mortgage lender and servicer. ""Homeward Residential, Inc."":http://www.gohomeward.com/, has rolled out a new program for consumers who are unable to qualify for modification options through federal initiatives.

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As of September 4, Homeward is offering access to loan adjustments for borrowers who aren't eligible for the ""Making Home Affordable Modification program (HAMP)"":http://www.makinghomeaffordable.gov/programs/lower-payments/Pages/hamp.aspx. Commenting on the structure for the company's alternative program, Homeward noted that it will target the reduction of borrowers' monthly payments to an affordable level, adding that a consumer's modification will be ""based on the borrowers' ability to pay.""

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Homeward's program will encompass three key elements, the first of which targets principal forgiveness initiatives for borrowers with mortgages carrying a loan-to-value ratio of 150 percent or higher, targeting the reduction of their LTV ratio to 115 percent or less. The second component of Homeward's alternative modifications will reduce participating borrowers' interest rates to as low as 2 percent for five years, with gradual upticks relative to the market to follow.

The third and final portion of Homeward's program will include an extended amortization term of up to 480 months. Javid Jaberi, executive vice president of servicing operations for Homeward, noted that the alternative modification avenue will give borrowers with ""limited options . . . an additional safety net.""

""We designed this program as part of our continuing efforts to help our borrowers remain in their homes,"" continued Jaberi. ""With the combination of principal forgiveness, a lower interest rate and amortization term extension, those customers who previously did not qualify for other modification programs may have another option to stay in their homes.""

Concluding his statements, Jaberi finished, ""We are offering this alternative modification program to help eligible borrowers achieve an affordable payment, and, as a result, eligibility for principal reduction and rate reduction will be determined on a case-by-case basis.""