HUD home loan modification rules and guidelines are a simple list of qualifications put forth by HUD to determine eligibility for modifying a HUD mortgage loan. Individuals who are having trouble staying current with their mortgage payments may want to consider requesting a modification.
About HUD Home Loan Modification Rules and Guidelines
Having a modification made to your HUD mortgage can benefit you greatly during financial hardships. When you have fallen behind on your payments, a modification to your loan can get your payments current and adjust your payment rate to something you can handle in the future. There are several qualifications and eligibility you must meet before you can obtain a modification to your HUD loan.
Facts about HUD Loan Modifications
HUD home loan modification rules and guidelines include:
- The goal of a modification is to reinstate a HUD loan that has fallen behind. A modification must result in the loan being reinstated.Modifications for other purposes are not allowed.
- Because only fixed rate loan types are allowed under the HUD modification rules. The HUD loan will turn in to a fixed rate loan after the modification if it started out as a variable rate loan.
- A modification to your loan will result in a change in your interest rate and may result in an extended loan period.
- Your loan modification may extend the amount of payments owed on your HUD loan, but cannot extend a loan longer then ten years.
Guidelines for Determining Modification Eligibility
HUD has published a series of guidelines to help a mortgagee determine if a borrower qualifies for a HUD loan modificiation. You must meet all of this criteria before you can qualify for a modification.
- Your mortgage loan must show a three month delinquency in your payments before you can qualify for a modification. If you paid any portion of your loan payment, you must wait three more months before becoming eligible.
- Your HUD loan must be at least twelve months old. The date you signed your loan documents, also known as your loan origination date, must be twelve months or more from the date you request a modification.
- You must have a valid, verifiable reason for not being able to make your loan payments. HUD considers a decrease or loss of income or a severe increase in living expenses to be qualifying reasons for a modification.
- Your HUD loan must be in delinquent status to qualify for a modification. Loans that have reached foreclosure status are not eligible for adjustments.
- Only primary residences are eligible for loan modifications. This means that the owner must occupy the property. The property cannot be rented out.
How a HUD Loan Modification is Completed
The mortgagee always handles adjustments made to mortgage loans directly. If you need a modification to your HUD loan, you will need to contact your mortgagee. The mortgagee, or lender, will review your case against HUD's qualification guidelines to determine if you are eligible for a loan. They will also send a qualified inspector to your property to determine the home's current condition. This information is collected to determine that the home still has monetary value and has not suffered any damage to the physical condition. If you are eligible to receive a modification to your HUD loan, the mortgagee will work with HUD to secure the modification.