Homeowners must meet loan modification criteria set forth in the Making Home Affordable program. Eligibility requires borrowers to be current on their home loan. Additionally, borrowers must not have been more than 30 days delinquent during the previous twelve months. Borrowers must meet debt-to-income ratios and provide evidence of financial hardship.
Mortgage lenders require borrowers to undergo a loan modification application process. Borrowers must provide financial records including payroll records, list of outstanding credit card balances, income and expense report, current credit report and tax return.
If borrowers do not have a copy of their tax return they must submit a 4506 tax form which grants authorization to lenders to obtain a tax transcript from the IRS. Banks require tax records to ensure borrowers earn adequate income to obtain a modified loan.
Obama’s Making Home Affordable program offers borrowers the opportunity to apply for a modified loan or mortgage refinance. Both borrowers and lenders can earn cash incentives by paying mortgage payments on time. Lenders can receive up to $1000 per year for three years, while borrowers can receive mortgage rebates up to $1000 per year for five years.
When home loans are modified, lenders can reduce interest rates and extend mortgage terms to make payments more affordable. Making Home Affordable requires lenders to reduce the total loan payment to no more than 31-percent of the borrower’s gross income. This amount includes the principal amount, interest, mortgage and homeowners insurance, and homeowner’s association dues.
Homeowners who are delinquent with payments or entered into preforeclosure can obtain housing counseling through the Department of Housing and Urban Development. HUD counselors can guide borrowers to programs that can help them become current on their loan. It is crucial for borrowers facing foreclosure to immediately contact their lender. Once a home enters into foreclosure the options to save it are greatly reduced.
The Obama administration has pumped billions of dollars into the government sponsored Making Home Affordable program. This loan modification program is available at no cost to qualified homeowners. Borrowers should beware of companies who solicit foreclosure assistance or loan modification programs for a fee.
Program details and eligibility requirements can be found at MakingHomeAffordable.gov. A list of qualified housing counselors is provided at HUD.gov.
–
About the Author:
Real estate investor and author, Simon Volkov, offers comprehensive information about loan modification and mortgage refinance programs, along with insights about Making Home Affordable program and foreclosure alternatives via his website at www.SimonVolkov.com. Subscribe to Simon’s mailing list to receive the latest loan modification and refinancing information.
