The new home loan modification plan is underway to give homeowners a way out of financial trouble. If you are quickly finding it impossible to meet your monthly mortgage payments, your options used to be very limited. Foreclosure was among the first and foremost of them. With this new program, there are bound to be a lot of questions. This article contains loan modification FAQ to answer your most urgent questions.
Where Did the Loan Modification Program Come From?
President Obama’s administration first announced the loan modification program as part of the Making Home Affordable plan on February 10, 2009. Starting March 4th, 2009, eligible homeowners can modify the terms of their loans to enable them to stay in their houses for longer.
Who Can Get a Loan Modification?
People who obtain loan modifications must physically reside at the home of which the loan is being modified. The loan must have been originated before January 1, 2009 and have an unpaid principal balance of under $729,750. They must provide verification of their current gross monthly income before obtaining a loan modification.
What Happens in a Loan Modification?
First, your monthly payment will be looked at as a percentage of your total gross monthly income. Under the Making Home Affordable plan, qualified homeowners can get their loan terms modified by the lender so that their monthly payment does not exceed 38% of their gross monthly income. After that, the government will match the lender dollar for dollar to lower the loan to 31% of monthly income. Those new monthly payment remain fixed for the next five years.
Where Does the Money Come From?
The Homeowner Stability Initiative is the new initiative that will make loan modifications possible. The Homeowner Stability Initiative is funded by $75 billion in taxpayer money to carry out loan modifications. This is estimated to assist 3 to 4 million homeowners.
We have supplied at the bottom of the page an application to start the process of getting a loan modification. The earlier you get started, the faster getting your loan modified will get done.