Obama's Loan Modification Program - 2% Home Loan Mod Plan Offers Hope

What is the Obama plan for struggling homeowners and could you be
eligible for this government bailout of struggling homeowners? The
federal loan modification plan is called Home Affordable Modification
and is designed to offer affordable monthly payments with interest
rates as low as 2%-all subsidized by $75 billion in stimulus money.
There are standard eligibility requirements and homeowners who are in
financial distress are encouraged to apply for this program to avoid
foreclosure.HAMP is Obama's plan for helping the housing market
recover and keep families in their homes by offering a loan
modification using standard methods. The plan calls for a new target
mortgage payment that will be affordable and sustainable in the long
run. There are several ways to reach this target payment-one is to
lower the interest rate down to 2%, another is to extend the loan term
out to 40 years if necessary. Lastly, the lender may reduce the
balance owed by either forgiving a portion or deferring some of it.
Again, the goal is to find a solution that will allow the borrower to
avoid foreclosure.Obama's loan modification plan requires banks to
sign a contractual agreement and abide by standard guidelines when
offering the loan workout to their customers. Homeowners will be asked
to submit an application that is four pages long and includes a
detailed financial statement that outlines the monthly income and
expenses for the household. This information will then be reviewed to
determine if it fits into the standard formula for approval with HAMP.
The debt to income ratio, assets ratio, target payment calculation and
other critical criteria will be analyzed for acceptability.Homeowners
who wish to apply for Obama's loan modification plan should really
take a few hours to learn about these basic guidelines so that their
application can be prepared correctly. Since this is a standard
formula used by all lenders, it will be beneficial for homeowners to
know how to fine tune their financial statement so that it fits the
guidelines before submitting it for review. Remember, only those
borrowers who can prove that they meet the federal guidelines will be
offered the program, so it is really critical to learn a little bit
about it before submitting your paperwork. The reward for this extra
effort could be a new loan mod with a 2% interest rate and an
affordable monthly payment.