Obama Mortgage Loan Modification Plan: President Obama\’s Mortgage Modification Program – Do You Qualify?

The nation is facing a lot of hardship with the economy right now. Because of this, the Obama administration has implemented a countrywide Federal Mortgage Loan Modification plan. For consumers who are being threatened with the foreclosure of their homes, this plan would be an excellent way to secure a new mortgage rate and a new interest rate. These new rates are designed to keep people in their homes and lower their monthly payments. However, there are stipulations that you must pass before you can qualify for this program.

Here are the basics required to qualify: Loan must have been originated prior to January 1, 2009
Loan amount must be less than $729,750 (higher allowed for 2-4 units). You must live in the home as your primary residence. Your current payment must equal more than 31% of your gross monthly income (including taxes, insurance and homeowners dues). You are facing a financial hardship situation. If you can meet these criteria, then you may be a good candidate for the Obama mortgage loan modification plan . The program is voluntary, however most lenders are participating. As an incentive, lenders will be paid for each modification completed under this program. In addition, homeowners who successfully pay their new payments on time will be eligible for bonus payments of $1000 per year, for up to five years. Those bonus payments will be deducted directly from the loans principal balance to help recapture equity.

Homeowners who want to apply for the mortgage loan modification plan will be asked to complete an application and provide their income documentation. The application will include required loan modification forms that must filled out detailing income and expenses, as well as a hardship letter verifying an acceptable financial hardship situation. How these forms are completed will in large part determine the lenders decision to approve or deny the application. If you can show clearly that you meet the approval guidelines, you will have a very good chance of getting a new lower payment. If you qualify, your mortgage loan payment will be reduced using these methods to achieve a new payment that equals 31% of your gross monthly income: First, the interest rate will be reduced to as low as 2%, then
Term lengthened to 40 years, if more is needed, then
Some principal may be deferred
The Obama federal plan has been expanded to include second liens as well. If you have lost a great deal of equity, you may see your second loan modified to an interest rate of 1%, or another option under the program allows for the entire debt to be forgiven. The lender will be paid a subsidy to forgive some second liens that meet certain qualifications. If you have a second loan, be sure to ask your bank about this option.

Obama\’s loan modification plan requires that you complete a financial statement detailing your income and expenses each month. Lenders use a standard 4 step formula to determine if you will qualify under the plan. You can use this very same formula to help you prepare your own accurate and acceptable application. Take advantage of a software program designed just for homeowners that actually mimics this same formula. Simply input your own income and expenses and the debt ratio, new target payment, disposable income and more are all calculated for you. You will see immediately if you fit into the program, or if any adjustments need to be made to your budget. The Treasury Department has informed banks that homeowners must be given an answer to their request for a loan workout within 30 days of receiving a complete package. This means that if you send in a properly completed financial statement along with all of your required income documentation, you could get the lower payment you need within 30 days! If you do not qualify, then other options will be presented to you, such as a short sale. That is why it is critical to use the software program to make certain you prepare your financial statement correctly.

These terms of Obama\’s federal plan are some of the most aggressive mortgage loan modification options available, and are designed to give the homeowner an affordable and sustainable monthly payment. If you are interested in applying for this plan, take the time to learn a bit more about how to complete your loan modification application forms so that you will have a better chance of approval. This is the second chance that many homeowners need to avoid foreclosure and stay in their homes. A little preparation before contacting your lender could be the difference in success or failure.

Learn more about Obama Mortgage Relief Plan Qualifications.