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 basic eligibility for this program: You must live in the home as your primary residence. Includes second mortgages.. You must be able to prove your income. Your current house payment must equal 31% or more of your gross monthly income
You do not have to be delinquent to apply for this loan modification program.. No charge to apply-Free loan modification program
Your loan must have been taken out prior to January 1, 2009. Loan amount is less than $729,750
Facing a financial hardship situation
How do you apply for the Home Affordable Modification Plan and what is the approval process? Interested homeowners need to begin gathering the required paperwork and completing the required forms. Borrowers must be able to prove that they are facing financial hardship, detail their income and expenses clearly and provide all of the necessary paperwork to be considered as a candidate.

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? Reduce interest rates to as lower as 2%. Extend loan terms to 40 years
Principal reduction with the Government sharing in the costs with lenders. What is the formula the lenders will use to determine who qualifies? Arrive at a target payment by multiplying the gross monthly household income by 31%
Subtract the monthly costs for homeowners insurance, property taxes, and any homeowners dues = the new principal and interest payment. 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
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. Do you know how to figure your own debt ratio and determine your new target payment? This is critical so that you can make any necessary adjustments to your monthly budget in order to fit into the approval guidelines.

The good news is that successful borrowers will also be given a financial incentive for keeping their new modified loan current. The incentive will grow for each month that the payments are made on time, with a possible $1000 bonus that will be applied directly to their mortgage balance for each year the payments are current, for a totoal of 5 years. Now is the time for financially strapped borrowers to begin learning more about how to qualify for this loan modification program and submit their paperwork for approval. Help is available for borrowers who know how to get it-make sure you do everything you can to save your home.

The above three tips can help you make the best of the modification loan process but you can get even better results if you use the services of a loan modification company. They’ll assist you drafting an effective hardship letter and presenting a compelling on your behalf. I highly recommend obtaining a free loan modification evaluation in order to determine the best course of action based on your financial situation.

Learn more about Obama Mortgage Relief Plan Qualifications.

My first thought is that of hope. I sincerely hope the majority of homeowners who currently allow their homes to go to foreclosure without ever exploring their options to avoid foreclosure will educate themselves and take advantage of the many viable alternatives available to them.

It’s easy to just walk away and give up – the path of least resistance, for certain. However, the foreclosure haunt continues for years affecting credit, employment and even security clearances. With the advent of HAFA as an additional alternative, foreclosure can be avoided.

Sometimes the best option is to walk away and allow your home to go into foreclosure, but if you just walk away, you could be throwing away $1000′s of dollars in relocation assistance you could obtain through HAFA. Not to mention, you could protect yourself from a hovering deficiency judgment for the monies lost in the foreclosure by the bank/servicer. It is well worth the time to educate yourself.

One of my passions is to inform the public about their options to avoid foreclosure. I setup my Phoenix real estate “Home Rescue Network” website to do just that. Distressed homeowners who have negative equity or who are behind on their mortgage need to take the time to educate themselves. There is a comprehensive list of options to avoid foreclosure available on the site and a questionnaire to help determine eligibility for the new government programs.

My National network of experienced top-notch brokers and agents across the U.S. are standing by to help homeowners understand their options to avoid foreclosure. The black hole of foreclosure is haunting and can be avoided, especially now. If you’re interested in more information, contact me directly.

I believe HAFA will help simplify and streamline the use of short sales and the deed in lieu of foreclosure (DIL) options with the use of the top features HAFA provides including:

1. Providing financial incentives to borrowers, servicers AND investors

2. Requiring servicers to release borrowers from future liability for the debt (no deficiency judgments)

3. Standardized processes, documents and timeframes will be used to streamline and standardize the short sale process

4. Complementing HAMP by providing workable alternatives to homeowners who are HAMP eligible

5. Eliminating the need for additional analysis on eligibility by utilizing financial and hardship information collected in conjunction with HAMP

6. Pre-approved short payoff terms prior to listing the property will be allowed

Roughly 24% of all properties with a mortgage (over 11,000,000 homeowners) have negative equity positions with their mortgage. I look forward to the seeing the results HAFA will provide to borrowers in avoiding foreclosure and how the goals of HAFA to standardize the process flow, minimize the performance timelines and standardize documentation of short sales will play out

Want to find out more about HAFA and Avoiding Foreclosure?, then visit Joe Martin’s site on Understanding HAFA for your needs.

Does it seem so difficult to keep up with your housing loan? When this happens, it is common for people to think that they might lose their home to their loan providers. Instead of beating yourself up with this possibility, why not consider mortgage loan modification? This is a program that allows your loan to be reinstated so that its terms are more suited to your financial capabilities. You just need to get yourself familiar with the software and you can start using it to your advantage.

So what is a mortgage loan modification? How will it work to your advantage? Basically, it is just like a refinancing modification program which allows you to adjust your existing loan to more affordable terms. This means that you don’t need to apply for a re-loan, instead, you just need to modify your loan. The process makes it much easier both for you and your loan provider.

Now, who will be eligible for this program? Only those who applied their loans before January 1, 2010 are eligible for this program. Eligibility for a mortgage loan modification has two classifications. One is for people with updated mortgage payments and the other is for those who have missed payments but have paid at least 31% of their total mortgage.

The government of course will be in the middle since it’s a mortgage loan modification. Basing on the modification program, the government subsidizes the cost which results to the drop in payments to a rate of 31%. If you’re asking how else a loan may be modified to suit the financial capability of the mortgagee, there are a number of possibilities. The interest rate on the loan may be reduced, the terms of payment may be extended up to forty years, the mortgagee may be offered another type of loan or a combination of any of these three may be applied possibilities. Aside from this subsidy, the government is also actively pursuing a campaign that motivates banks and other loan providers to participate in the program.

Before anything else though, it is crucial that you know the difference between a loan modification agreement and a forbearance agreement. The temporary solution offered to mortgagees who are experiencing financial problems that will soon be over is called loan modification agreement while the program for those who are unable to pay an existing loan is the forbearance agreement.

If paying your mortgage has been a major issue, it might be time to apply for a mortgage modification. Worrying alone won’t save you. You have to act on the situation and act on it decisively by exploring your options for getting the best loan modification program for you

Stop Foreclosure: Documents Your Lender Needs From You

Today, Freddie Mac released a new video aimed to help people who are in trouble with their mortgage and wondering about a loan modification titled “Stop Foreclosure: Documents Your Lender Needs To Help You“. For anyone right here in Pennsylvania who is speaking with their lender about a loan modification, this video is helpful and shows what documents are needed in the process. With the crush of phone calls from people inquiring about a loan modification, many lenders are swamped. This video does a good job of helping people be more fully prepared in advance of calling their lender.

Pennsylvania Loan Modification: You Will Need These Documents

• A copy of your most recent paystubs that show your net take home pay
• For any other debt such as credit cards, car loans, etc. – have account balances and minimum payment amounts
• Any second mortgage or home equity line of credit statements that you have
• A copy of your last years tax return
• A copy of a recent mortgage statement

Pennsylvania Loan Modification: Hardship Letter Is Important

If you are wondering if you really need to write a hardship letter — don’t wonder. A well written hardship letter is a vital part of the loan modification process.