Obama's Federal Government Loan Modification Program - The Formula to Find Out If You Qualify

The Federal Government has set aside $75 billion dollars to help struggling homeowners with a loan modification program so they can avoid foreclosure. The goal is to help 5 to 6 million families get a lower mortgage payment so they can afford to stay in their home. This plan is not for everyone-find out if you may qualify for help by learning the formula your bank will use.

Who qualifies for this loan modification program? Here are some general guidelines for eligibility:

• Homeowners must live in the property as their primary residence


• Loan must have been originated prior to January 1, 2009


• Not required to be delinquent on payments, but must demonstrate financial hardship now or in the near future


• Must be able to provide proof of income and have a current mortgage payment that is greater than 31% of your gross monthly income


• Loan amounts of $729,750 or less for 1 unit properties-higher for 2-4 units

What are the primary features that will be offered to qualified homeowners to arrive at an affordable payment based on 31% of their gross monthly income?

1. Reduce interest rates to as lower as 2%


2. Extend loan terms to 40 years


3. Principal reduction with the Government sharing in the costs with lenders

What is the formula the lenders will use to determine who qualifies?

1. Arrive at a target payment by multiplying the gross monthly household income by 31%


2. Subtract the monthly costs for homeowners insurance, property taxes, and any homeowners dues = the new principal and interest payment


3. Using the current loan amount, reduce the interest rate to as low as 2%, extend the term to 40 years and if necessary defer or forgive some principal balance to achieve the target payment


4. If the target payment can be reached using the standard methods of modification, then the homeowner is a good candidate for assistance.

While this loan modification program is voluntary, most lenders and servicers are expected to participate. The Federal government is offering financial incentives in the form of $500 payments to servicers and $1500 to mortgage holders that offer a loan modification program to their borrowers as well an annual payments. In addition, homeowners who stay current on their new modified loan will be given a monetary incentive for each year they remain current, for a total of $5000 at the end of 5 years.

A successful homeowner will understand what paperwork will be needed to submitted to their lender and, just as importantly, how to complete their paperwork properly so the loan modification application is processed quickly.  You can use the very same formula your lender will use to pre-qualify yourself and adjust your budget before the bank reviews your application. 

Learn more details about the formula, target payment and get the help you need to apply and qualify for a loan modification by ordering and downloading the best selling handbook for homeowners, The Complete Loan Modification Guide. This is a low cost, easy to read home edition loan mod kit that will provide you with everything you need to prepare a professional and acceptable loan modification application. You are provided with all of the necessary forms and given detailed directions on how to complete them properly. The Complete Loan Modification Guide will take you step by step through calculating your debt ratio, completing the financial statements, writing your hardship letter and then putting it all together to submit to your lender. Learn how to apply and qualify for the Obama federal program too. Get started today on the path to secure home ownership, order and download The Complete Loan Modification Guide.

For more information about mortgage loan modification, please visit us at: http://www.myloanmodificationcenter.com

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