Beginning this year, many homeowners who received loan workouts to avoid foreclosure will face higher rates and monthly mortgage payments.
Participants in the Home Affordable Modification Program are scheduled for a series of increases in their rates, as are borrowers who participated in lenders' proprietary relief programs. Many of these borrowers are still underwater. Rates could jump as high as 5.4 percent and monthly payments could balloon by as much as $1,724 for some borrowers, according to a report from the special inspector general for the Troubled Asset Relief Program. Most borrowers should be able to handle the first two jumps, but the third one "may prove problematical," projects The Urban Institute, which adds there will unlikely be a major problem until that happens -- in 2016.
Half of all owners with active HAMP modifications reside in California, Florida, New York, and Illinois.