Modify Your Mortgage Payments – Obama Home Loan Modification Plan can offer affordable terms

A loan modification plan offered by Obama promises to help homeowners turn their mortgages into low, affordable payments. Funded with $75 billion in stimulus funds, this plan is designed to provide government-subsidized assistance to borrowers facing financial hardship and at risk of losing their homes. Which homeowners are eligible for this relief?

Obama Loan Modification Eligibility Guidelines:

If you can answer yes to these questions, you may be able to request help:

  1. Are you facing a financial emergency that is making your mortgage unpayable?
  2. Do you live in the apartment as your primary residence?
  3. Was your loan taken out before January 1, 2009?
  4. Is your loan balance less than $729,750?
  5. Does your current mortgage payment — including taxes, insurance, and any HOA fees — equal MORE than 31% of your gross monthly income?

Once these basic criteria are met, the homeowner must prepare and submit an application to determine if they qualify for an Obama home loan modification. Part of the application is a detailed list of monthly income and expenses – the so-called annual statement. The government loan processing plan uses a standard formula to determine eligibility, and information from the financial statements is used in that formula.

Homeowners who are unfamiliar with the government’s loan modification approval formula can be helped by using a software program that mimics the federal approval guidelines. Debt Ratio, Asset Ratio, New Target Payment, Disposable Income, and other critical factors are all calculated automatically by simply entering monthly income and expenses. Preparing and submitting an accurate and acceptable financial report will help ensure the best chance of approval.

Many homeowners were frustrated with the application process under the state loan modification plan because their lenders were unresponsive. However, the application process for the program has now been streamlined and it is critical that the initial paperwork is properly completed to expedite approval. The federal government now requires participating lenders and service providers to respond to a loan processing application within 30 days of receiving a complete application package. The key to a quick and positive response is to ensure everything required has been properly prepared and submitted.