Uncle Sam is throwing a lifeline to homeowners drowning in high mortgage payments and stuck in bad home loans. The federal government has implemented a loan workout program called Home Affordable Modification. Targeted to offer relief for almost 5 million borrowers, find out if this plan could be the answer you need to keep your home.
Home Affordable Modification Plan has standard guidelines for qualifying and standard methods of revising the loan terms for eligible borrowers. Basically, the program takes the guess work out of who gets help-if you can meet the requirements for approval then you have a very good chance of getting the affordable mortgage you need. The program is voluntary, but since the Feds are paying the banks for each loan re-worked using the plan, most banks are participating.
President Obama has mandated that all borrowers who request consideration for the Home Affordable Modification Plan be given the opportunity to apply. While a determination of eligibility is made, any foreclosure process will be halted. You do not have to be delinquent to qualify, but if you are not in default, you must show evidence of imminent financial hardship and default.
The central goal of the plan is to provide a new target payment that equals just 31% of the borrowers gross monthly income-and this has to include principal, interest, taxes, insurance and any homeowners dues. If your current payment equals less than 31% of your gross income, then you will not be eligible for this plan. The standard methods of arriving at this low payment are:
- Reduce rate by .125% increments-to as low as 2%
- Increase term to 40 years
- Forebear (defer) or forgive principal balance
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