Beginning this year, those whose loan terms were modified so that the interest rate dropped to as low as 2% will have to deal with higher rates that could, in some cases, drive the monthly payment as much as $1,724 higher.
Why? Because “permanent” interest rate reductions under the government’s Home Affordable Modification Program were anything but. Whether participants realize it or not, rate reductions last for only five years. Consequently, the clock is ticking — especially for the earliest beneficiaries of the program, which was built to help underwater or financially strapped borrowers save their homes.
Exactly how many borrowers face higher rates and larger payments is unclear.
As of Dec. 1, 2013, 88% of the nearly 900,000 people who had their loans modified under HAMP were scheduled for increases, according to a report from the special inspector general for the Troubled Asset Relief Program. A report from the Urban Institute, a research organization, says that as of January, more than 1.1 million owners received interest rate abatements under the program.
via Many homeowners with loan mods face rate increases – LA Times.