Home Affordable Loan Modification Plan - The US government has announced a major expansion

By making major policy changes, the US government has announced a continued expansion of the Home Affordable Loan Modification Plan which has often been referred to as Obama’s loan modification plan. The new changes are targeted at keeping even more homeowners in their homes. These changes have been announced by President Obama.

The Home Affordable Loan Modification Plan is directed to homeowners who have been making mortgage payments, but who are unable to refinance their mortgages because their homes have become “upside-down”. Due to drastically falling home prices, they now owe more on their mortgages than the current of their home. The Home Affordable Loan Modification Plan is a federally subsidized program to allow mortgage refinancing for 15 or 30 year terms. Refinancing is subject to current interest rates and has closing costs. It is designed to help homeowners facing higher mortgage payments due to adjustable rate mortgages by replacing it with a fixed rate mortgage. Here’s how you can tell if you are eligible for a loan modification.

1. You are not over 30 days late in paying your mortgage payments for the past year but this can be adjudicated by showing personal financial hardship.

2. Your home is your primary residence.

3. This is now available for all mortgages not just loans through written under Freddie Mac or Fannie Mae are eligible but this is rapidly being changed and soon most mortgages that qualify will be eligible. You must have had the mortgage prior to 1/1/2009.

4. Tour mortgage cannot be more than 105% of the home’s value.

5. You need some proof of your earnings to show that you are financially able to make the refinanced mortgage payments.

6. Home Affordable Loan Modification Plan applies to first mortgages only and the principal balance can not exceed $727,500.00

This loan modification plan is widely received by most lenders since lenders receive incentive payments from the Treasury Department for every qualified loan they approve. Your lender will provide an application which you must complete and submit, together with current financial documentation. Be sure your information is accurate, since this is what your lender will be basing its decision on. The possible loan modification that your lender can make is reduced interest rates and extension of the mortgage term, both of which will serve to reduce your monthly payments. Due to this expansion of the Home Affordable Loan Modification Plan many more homeowners are not qualified for loan modification and this is good news for everyone.