spreading misinformation TIC Toc About this federal housing administration(FHA) recently increased the maximum mortgage modification period, causing confusion for homebuyers.
Thank you for reading this post, don't forget to subscribe!The FHA announced a final rule last month that allows mortgagors to extend the maximum FHA-insured mortgage loan modification period from 360 months to 480 months after default. This change is going to be implemented from May 8.
While the FHA’s recent decision only applies to existing mortgages that have defaulted, some false TikTok content claims that the FHA has approved a 40-year mortgage loan program for first-time home buyers.
“Now the difference is, they [the FHA] “Extending your loan term to 40 years, and that increases your purchasing power as a buyer,” a user claiming to be a lawyer said in a recent video. “You can go out and get a bigger home now because you have higher borrowing power at 3% less as your loan term gets extended to 40 years.”
The new FHA regulation is a loss mitigation option designed to help homeowners keep their homes after they default by allowing mortgage lenders to further reduce monthly payments for borrowers.
A 40-year loan modification can help borrowers avoid foreclosure by spreading the outstanding mortgage balance over a longer period. The FHA said in March that this makes the monthly payment more affordable.
Department of Housing and Urban Development (HUD) did not respond housing wireRequest for Comment on Circulation of Misinformation on FHA’s 40-Year Loan Modification Decision prior to publication.
Another video from a TikTok user who claims to be a financial advisor says that HUD offered a 40-year FHA mortgage.
“Right now, a 30-year FHA loan for $500,000 at 6.7% interest would cost $3,500 a month. What if we allowed the 40-year option which would only be $3280 a month saving them $220?” said the TikTok user in a video where he plays the role of HUD officer.
But while there is content on TikTok that misrepresents the FHA’s loan modification announcement, some users have uploaded videos that warn about the misinformation.
“It’s not for new loans (…). The 40-year loan is going to be for people who already had an FHA loan and demonstrate that they need it.” [the] That loan needs to be modified or changed so that they can keep their home and not foreclose,” said a user, who claims to be the loan originator.
The user said, “This is a perfect example of why you have to be careful with clickbait content.”
The FHA’s final rule is also available for FHA amendment option requirements. fannie mae– And Freddie MacBacked mortgages both offer a 40-year loan modification option.
Borrowers who choose a 40-year loan modification will see additional interest payments during the extended term, but HUD notes that the opportunity for borrowers to retain their homes with a more sustainable payment plan outweighs the drawbacks.
“Rising interest rates may prevent a 40-year loan modification from providing significant payment reductions HUD believes that rising interest rates make a 40-year loan modification more important in situations where a 30-year loan modification would The monthly payment does not sufficiently reduce the amount that the borrower may be able to maintain his home, HUD said in its final ruling in March.
