Struggling homeowners still in danger

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Nearly 2 million homeowners who reduced their mortgage payments through loan modifications after the 2008–2009 housing crash now face interest-rate increases as those modified terms elapse. Starting in 2014 and extending through 2020, borrowers whose interest rates were reduced are likely to notice an increase in their monthly mortgage payments, according to an April 2014 report by Black Knight Financial Services.

After the crash, lenders cut interest rates or lengthened repayment periods to avoid foreclosures, says Kostya Gradushy of Black Knight. At least 40 percent of those modified loans are underwater, Black Knight says, which means that the loan is for more than the house’s worth.

Homeowners who face a mortgage reset should seek counselors who are approved by Department of Housing and Urban Development (HUD) who will provide individualized solutions, according to affordable-housing agency NeighborWorks America. Foreclosure-prevention counseling is free through HUD’s Housing Counseling Program. Fees are permitted for other housing advice, according to HUD guidelines.

To find counselors in your area, you should go to