Posts Tagged ‘modification program’
As many homeowners have found it increasingly difficult to make ends meat and afford their home mortgage payments, mortgage defaults and foreclosure proceedings have risen. These homeowners have several options that may put them in a position to bring their accounts current and allow them to make their subsequent mortgage payments. One such option if a homeowner qualifies is to take part in the United States Treasury Department’s Home Affordable modification program .
There are some basic qualifications for a federally sponsored loan modification program : Principle residence only
Loan amount less than $729,750
Current payment equals more than 31% of the gross monthly income
Loan taken out prior to January 1, 2009. Homeowner facing a financial hardship situation. Principle residence means that you reside in this home as your primary place of residence. Duplex and fourplex units may have high loan balances this program. The new modified payment will be targeted to equal just 31%- this means that the total housing debt, including principle and interest, taxes and insurance and HOA if applicable will equal just 31% of the gross monthly income as stated.
The benefit to a homeowner is rather obvious, in many cases a very large reduction in monthly mortgage payments. Additionally, should the monthly payment be reduced by 6% or more, homeowners are eligible to receive $1,000 per year for up to five (5) years, payment that goes straight towards reducing the principal balance on the mortgage loan as long as the homeowner is current on their monthly payments.
In order to encourage lenders and banks to take part in the program, the lender also receives various significant financial benefits. First and foremost is their ability to avoid foreclosing on another house that likely has no equity. The lender shares the financial burden with the Treasury Department; additionally the lender or bank receives compensation from the Government in the amount of $1,000 for each loan modified pursuant to the program.
The lender will also receive up to $1,000 per year for each year the homeowner remains in the program and stays current on their new mortgage obligation. Should the homeowner be current when entering into the modification, an additional benefit is a one-time incentive payments of $1,500 to lender will be provided.
Learn more about Obama Mortgage Relief Plan Qualifications.
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A lot have been said about how the Obama mortgage loan modification program has not met what it’s intended to be. Whether it has met the goals set forth at the inception of the program, it still remains to be a great option for homeowners who would really want to live the dream of owning a home. While mortgage refinancing loan is an option for people with better value on their homes and have equity as well, this mortgage loan modification program should not be taken for granted. It is still a great option for those homeowners who would really like to get through rough times.
Major Banks like JPMorgan Chase, Wells Fargo and Citigroup are part of the initial lenders who received the subsidy and incentive payments which runs in billions of dollars so that they can lend to distress homeowners. The program was launch on April 2009 with the initial delivery of those subsidies and incentives to the big lenders. But these banks are not the only recipient of these massive 75 billion dollars to save and help distress homeowners so that they can hold onto their homes and continue paying their mortgages at a more sustainable rate.
The Obama mortgage loan modification program is a great opportunity for distress homeowners to maintain and preserve their dreams of owning their homes. Distress homeowners including those housing counselors are eagerly awaiting the launch of the loan modification program which was announced on Feb. 18 2009.
There is an estimated nine million borrowers who hope to stay in their homes in the two part plan that calls for servicers to reduce monthly payments to no more than 31 percent of eligible borrower’s pre-tax annual income or to refinance eligible mortgages even if the homeowner has little or no equity on their homes.
This is a quote from Money.CNN.Com news outlining the program benefits and advantages.
Know where you stand and how you can avail of the program!
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