Posted on 04/06/2023 12:32:39 PM PDT by EBH
The Federal Housing Administration (FHA) announced Wednesday that it’s increasing the maximum term for a mortgage modification to 40 years or 480 months. The previous term limit was 30 years or 360 months.
The federal agency suggested the move would protect borrowers against default if they had lower monthly payments.
The new regulation aims to help homeowners retain their homes after defaulting by allowing mortgagees to further reduce the borrower's monthly payment, since the outstanding balance would be spread over a longer time frame.
The change will align FHA with modifications available to borrowers with mortgages backed by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corp. (Freddie Mac), which both currently provide a 40-year loan modification option.
The final rule adopts HUD's April 1, 2022, proposed rule without change, the agency said. The new rule will takes effect May 8, 2023.
Why not do like Japan does with 100 year mortgages?
Or, maybe they should look for a less expensive house that they can afford.
There is a lot of talk about the “evils of capitalism” these days. What is evil is the amount of debt and the cost of debt servicing these days.
Companies and people are so buried in long term debt, a very small portion of the cost of stuff is actually “for the stuff.”
Reduce monthly payment but increases interest paid over the term.
Or they just buy more house for the same original payment.
I weep for our children and grandchildren...
So they are renting.
Makes me wonder if I can take my low interest 15 year loan and convert it to a 40 year loan at the same rate?
The consequences of a debt based monetary system.
Someday they are going to have to declare a jubilee where all debts are erased and start the system all over.
Excessive debt becomes slavery.
What could possibly go wrong?
Assuming a $350,000 mortgage at a rate of 6%.
A 30 year loan will have a payment of $2098/month.
A 40 year loan will have a payment of $1926/month.
A $350,000 mortgage at a rate of 5.22% will also have a payment of $1926/month. A difference of 0.78% makes up for 10 years of payments.
The average rate today is 6.88%.
The average rate in 2021 was 2.96%.
The rates are what drive the unaffordability of the mortgage. Not the number of years it is for.
Looks like average rates today are
15 year - 5.776%
30 year - 6.881%
So I would imagine that 40 year rate will be even higher than the 30 year rate.
More like renting forever.
>Reduce monthly payment but increases interest paid over the term.
Math is hard (and racist).
And after 5 years or so.. When they go to refinance. They realize they have paid virtually nothing in principle.
JEEZE people will have passed away before they EVER SEE their mortgage paid off, how sad!!
A way to lock in the inflation they caused with holding rates down for too long after 2009.
“The rates are what drive the unaffordability of the mortgage”. Mortgages drive the unaffordability of homes. I imagine the younger generations would have a much different outlook on life if mortgages were never allowed to exceed 10 years to begin with.
Subsidizing the overpriced housing market even more...
Great Job... idiots
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