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Home Affordable Modification: What is it all about?

Posted on: 15th Jul, 2009 02:59 am
The Home Affordable Modification program is one of the initiatives taken up by the Obama Government to help the homeowners who are upside down on their mortgage. In this plan, the borrower's monthly mortgage dues are reduced to as low as 31% of their gross monthly income.

Homeowners can qualify for this home affordable modification when they're unable to make monthly mortgage payments due to reasons like drop in income or an increase in payments. In order to take advantage of this loan modification program, the borrowers should be past due on their mortgage payments or they must be at risk of default on their mortgage.

Though it has been said that the participation of the lenders are voluntary, all those financial organizations which receive government aid will have to take part in Home Affordable Modification program.
Hey Niicss,

Thanks for sharing such important information with the community. I would like to add some more points to what you've said.

Those mortgages which have been originated before January 1st, 2009, are eligible for the Home Affordable Modification program.

Eligibility criteria:

  • The property should be the borrower's primary residence and the borrower should at present live in it.

  • The mortgage payment of the borrower should be higher than 31% of his/her gross monthly income.

  • On a single family home, the maximum loan amount should be an unpaid balance of up to $729,750.
The best part of the program is that the borrowers will not have to pay any kind of fees when they apply for this program.

Documents required:
Borrowers will have to provide two of their most recent pay stubs. In case of a self-employed borrower, the income will be verified through third-party documentation. This documentation may include bank statements, freelance paychecks, etc. Apart from this, the borrower will have to sign an "Affidavit of Financial Hardship". The borrower will also have to submit bank account and investment statements to prove that they do not have adequate assets pay off their mortgage dues.

Take Care.
Posted on: 15th Jul, 2009 03:20 am
Hi all,

The Home Affordable Modification program is indeed a good option for all those home owners who are behind on their mortgage or are at risk of an imminent default. Under the program, the interest rates can be brought down by as low as 2%. If that does not reduce the DTI ratio of the borrower to less than 31%, the lender can extend the term of the loan to 40 years. The lender can even defer a portion of the loan (forbearance) with no interest.
Posted on: 16th Jul, 2009 03:29 am
The Home Affordable modification program (or Obama loan modification) can be offered to borrowers under the following circumstances.
  • Missed payment or risk of default: The borrower should have missed at least one monthly payment or he may be at risk of a default due to hardship such as job loss, income reduction, etc.

  • Bankruptcy: Borrowers who have initially filed bankruptcy can get their loans modified under Home Affordable Modification program.

  • Mortgage in foreclosure: Those who are already in foreclosure may qualify as per Fannie Mae and Freddie Mac guidelines. Loan modification will put a stay on foreclosures as per state laws.
What you need to provide:

If you're seeking Obama loan modification, you'll have to document your income, expenses and provide enough proof of your hardship because of which you require a loan modification. As per Fannie Mae and Freddie Mac guidelines, you'll need to provide a credit report. However, there's no requirement for a credit score. You will also have to provide proof of ownership on your property.

There are certain property requirements as well. These are:
  • The property should be occupied by the borrower.
  • It can be a detached home, 40-unit residential property, duplex, triplex, mobile home as well as a condominium.
  • The property shouldn't have much equity.
  • The property shouldn't be a second home or vacation home.
Hope you find this helpful.

Regards,

Jessica
Posted on: 18th Jul, 2009 06:01 am



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Posted on: 25th Jul, 2009 08:49 am
the white house has announced an expansion of the foreclosure prevention efforts that were taken up by the government last year. temporary help will be available for the unemployed borrowers. the expansion plan as taken up by fha is mainly directed towards helping borrowers who are current and will be able to qualify for fha backed loans once they get a principle reduction.

along with the initiative taken by the government, fha will play a bigger role in stopping foreclosures. the new program will allow the underwater borrowers to refinance their mortgages into government backed loans. in some cases, as a part of its foreclosure prevention efforts, government will instruct lenders to reduce mortgage balances of the borrowers.

the banks will also receive additional payments from the government while they reduce the principle balance. however, the amount of payments would depend upon the amount that they reduce. also, borrowers who want their mortgages to be permanently reduced should be current on their home loans for more than 3 years.
Posted on: 27th Mar, 2010 03:12 am
have first and second morgages balloon house is 20 to25 thousand below what we bought it for in2005, whould we be eligigable for this program
Posted on: 30th Mar, 2010 02:35 pm
Hi frank,

As far as I know, though you do not have any equity in the property, you would still be able to qualify for this program. You need to speak to your lender and check out what you need to do in order to get qualified for this program.
Posted on: 31st Mar, 2010 12:08 am
As the federal government announced the expansion of HAMP in order to lend a hand to unemployed as well as borrowers who are underwater, a large number of people are unhappy with it. A few wrote in to the government saying why they have to pay for the mistakes of homeowners who lived beyond their means when credit was easy to get. After all, in every case, it is the taxpayer's money which is used to give financial incentives to the lenders.

But I personally feel that the government has done the right thing by considering the greater good over the long term and not just the immediate question of what is fair.
Posted on: 07th Apr, 2010 04:30 am
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