Loan Modification Criteria Under The Obama’s Federal Program
Do you want to take advantage of President Obama’s federal loan modification program? If you are behind on your mortgage, you are certainly advised to weight this as a serious option. Those incapable to stay current on their mortgage payments run a high risk of default. That, in turn, will lead to foreclosure. Anyone that has been following the news as of late realizes that the sheer number of foreclosures in the United States is nothing brief of staggering.
Record foreclosures are certainly not something that helps the economy in any way. Consider this the main reason why a loan modification program can be considered such a superb help. The program provides federally backed funds intended to cover alterations to original loan agreements to make them more affordable.
However, you cannot just “announce” that you want to take advantage of the program. If that was the case then people might take advantage of the program. Rather than see this occur, the program has instituted basic criteria for inclusion. This way, only those with a dire and serious situation can take advantage of it.
What are the criteria? Here is an overview:
Very first and foremost, you must have a legitimate financial hardship that is preventing you from being able to pay your bills. The reasons for this can be varied. Loss of wages and medical expenses are very likely the two most common. Detailing the specifics of your financial difficulties is the very first step to take as this initiates the process.
In order to seek a loan modification, you need to be able to prove you have a viable source of income. Such a requirement is in place to ensure you can pay the fresh monthly mortgage amount. Indeed, it would not be all that worthwhile to modify the monthly payment is the recipient would not be able to stay current. Modification is exactly that – it modifies the mortgage. It does not forgive or lodge debt.
You will not be approved for a loan modification on a non-primary residence. Vacation homes and any property purchased for rental income or investment purposes are not eligible.
You remaining balance on the loan must be in excess of 80% of the home and the balance must be worth less than $729,751. Homes that fall outside of this category will be denied on statute.
The criteria may seem stringent but the criteria protects the integrity of the program. In other words, it makes sure only those truly in need can access it.