Troubled US homeowners get more government relief

Author: Associated Press
MGN Online

WASHINGTON (AP) – Homeowners whose mortgages were modified to stave off foreclosure could receive an additional $5,000 reduction in their loans from the government next year.

The plan announced by the Treasury and Housing and Urban Development departments would affect roughly 1 million borrowers who received reduced mortgage rates through the Home Affordable Modification Program during the Great Recession.

The discounted 2 percent mortgage rates are scheduled to rise by a percentage point for many of these borrowers entering the sixth year of the program. That would increase monthly payments for those who might still be struggling to find work or additional income.

The plan is designed to mute the shock from higher interest rates for those borrowers. Nearly two-thirds of the program’s borrowers have less than 20 percent equity or owe more on their mortgages than their homes are worth, putting them in a fragile financial situation.

Mortgage rates on the modified loans will eventually rise to market levels.

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