| Homeowners facing financial hardship due to | | | | could find yourself with a pending sale date. |
| unaffordable mortgage payments could possibly | | | | Participating lenders will have to review each request |
| qualify for the Obama federal loan modification | | | | from homeowners interested in applying for the |
| program. Part of the Making Home Affordable stimulus | | | | Obama federal loan modification program. Each |
| plan, this is a lifeline to borrowers who are stuck in high | | | | borrower will have to provide required documentation |
| interest rate loans, but may not have been able to | | | | and a decision will be made on a case by case basis. |
| qualify to refinance or get a loan workout with their | | | | Here is a list of some of the required paperwork |
| lender. The plan is targeted to help up to 5 million | | | | homeowners need to gather: |
| borrowers find a solution to avoid foreclosure with $75 | | | | |
| billion in funding. Here is some information about the | | | | 1. Loan modification application form called a Financial |
| plan and who might qualify. | | | | Statement |
| The Obama federal loan modification program-called | | | | 2. Current pay check stubs for all borrowers |
| Home Affordable Modification, or HAMP- seeks to | | | | 3. Most recent tax return (Federal only) |
| offer low, affordable and sustainable mortgage | | | | 4. Proof of financial hardship situation |
| payments that will equal just 31% of the homeowners | | | | Standard approval guidelines for HAMP mean that all |
| gross monthly income. That figure will also include | | | | borrowers must meet certain criteria in order to be |
| taxes, insurance and any homeowners association | | | | eligible. Your debt ratio, target payment and disposable |
| dues. In order to induce lenders and servicers to | | | | income will all have to meet the approval guidelines in |
| participate, the Treasury department is offering | | | | order to qualify. If you need help completing your |
| monetary incentives for each loan that is modified | | | | financial statement, take advantage of a software |
| under this plan. The government will also share in the | | | | program designed just for homeowners that mimics |
| cost to the bank by covering some of the lost | | | | the federal aproval guidelines. Simply input your own |
| revenue due to reduced interest rates. Borrowers will | | | | income and monthly expenses and all the calculations |
| also be paid to participate in the form of success | | | | are done for you automatically. You will see |
| bonuses. For every month that the homeowner | | | | immediately if you might need to make some |
| remains current on the new modified loan, they will be | | | | adjustments to your figures in order to qualify. |
| paid $1000 per year up to $5000. This amount will be | | | | Homeowners do not have to be delinquent on their |
| credited towards the loan balance to help replace lost | | | | payments to qualify-in fact the lenders will be paid |
| equity. | | | | more money by the plan if they offer help to |
| First trust deeds as well as second loans-such as | | | | borrowers who are not yet delinquent, but facing the |
| home equity lines-are eligible for participation. Lenders | | | | prospect of financial hardship. There is expected to be |
| are asked to sign an agreement with the Treasury | | | | a large influx of applications, so homeowners are |
| Department that mandates the bank make a diligent | | | | encouraged to get started immediately and to be |
| effort to offer loan workouts to qualified homeowners. | | | | patient as the process is implemented. Successful |
| Participating lenders will use a standard method of | | | | candidates will be able to prove that they are suffering |
| terms to arrive at the new target mortgage payment. | | | | or will suffer a financial hardship making the current |
| While the application is being reviewed and a | | | | payment unaffordable. They must also be able to |
| determination made, foreclosures and trustee sales will | | | | meet the 31% debt ratio requirement. Homeowners |
| be halted-although foreclosure filings are allowed. The | | | | can get a jump start on the application by learning how |
| clock does not stop ticking during the review process, | | | | to pre-qualify themselves and knowing how to prepare |
| so make sure your application is done correctly or you | | | | their loan modification forms properly. |