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Mortgage Relief Plan

The Treasury Department announced new changes in an effort to streamline burdensome paperwork required for its mortgage relief plan.  The changes to the problem-plagued program could help more homeowners successfully complete a loan modification. Refinance lenders will now be required to collect two pay stubs at the start of the process, and borrowers will have to give the Internal Revenue Service permission to provide their most recent tax returns at the same time, according to the people who declined to be identified because the details were not yet final.

Participating mortgage companies must acknowledge they received a borrower’s application within 10 days and approve or deny the application within 30 days. After that, borrowers will still be required to make three months of trial payments before the mortgage modification becomes permanent. Treasury officials are also working on a plan to give unemployed borrowers a break on payments possibly for six months but those details were not expected Thursday. A Treasury spokeswoman declined to comment.

With foreclosures at record-high levels, the Obama administration’s program to attack the crisis has been a disappointment. Only about 66,500 borrowers, or 7% of those who signed up, had completed the program as of December. The program is designed to reduce homeowner’s monthly payments by lowering current mortgage interest rates to as low as 2% for five years and extending loan terms to as long as 40 years.

Posted in Foreclosure Articles, Mortgage News, Published Article, Subprime mortgage news.

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