Loan Modification
Loan Modifications have been in the news over the past year with the disastrous lending strategies of former moguls Fannie Mae and Freddie Mac resulting in millions of home owners being faced with foreclosure. It is essential to understand not only the concept of a loan modification, but also the benefits and inherent risks implied. With President Obama’s new Home Affordable Modification Program launched March 4, 2009, comes the need to understand:
- What is a loan modification?
- How can I benefit from one?
- Am I eligible?
Loan Modification
A Loan Modification is a restructuring of a mortgagor’s loan that involves making irrevocable changes in one or more terms of the loan for the purpose of reinstating the loan and structuring the payments to be affordable for the Mortgagor. The housing crisis of 2009 came from the inability of mortgagors to make their house payments, resulting in foreclosures on houses that were worth less than the actual mortgages. This created a domino effect in which lending institutions lost millions of dollars on loans that were floated on inflated home values.
How Do I Benefit?
If you are a home owner facing foreclosure due to an inability to keep up with your mortgage payments, then you have the opportunity to be able to stay in your home and make affordable payments. Once you are assessed as eligible, your loan will be reinstated with a lending institution that has chosen to participate in the new Loan Modification plan. They will restructure your loan to be only 38 percent or less of your gross monthly income. Then, the government steps in and lowers your payment even further to 31 percent.
Pay For Performance
The Obama administration also created a reward program. All those mortgagors or borrowers accepted to the Loan Modification program may also receive a Pay for Performance Success Payment that is applied directly to the balance of the principal mortgage loan. You must be current with your monthly payments, but you can receive up to $1,000 each year for the five years of the program.
Am I Eligible?
The current Loan Modification plan of the Obama administration is targeted for homeowners who have been caught in the housing slump and current recession as opposed to speculators scheming to make money from the opportunity. That means, that if you:
- Have a loan that originated prior to Jan.1 2009
- Own your own single family 1-4 unit home, including condominiums and co-ops
- Occupy your house as a primary residence
- Have an outstanding balance in the mortgage principal of up to $729,750 for a single unit
- Have financial difficulties including foreclosure, bankruptcy, and are being sued for the original mortgage
- Have suffered a loss of income
- Apply prior to December 31, 2012 You may be eligible.
Get Started Now
Simply fill out the form found on all the pages of our site for a free, no obligation consultation. You will be promptly contacted by an expert who can let you know if you qualify within minutes.
