Obama's Treasury Loan Modification Guidelines For Homeowners

The Treasury Departments loan modification plan isshort telephone interview will also be conducted and
being offered by lenders and features new,based on the information you provide, a determination
aggressive mortgage terms to qualified homeowners.will be made to either approve or deny or application. If
4 to 5 million borrowers are expected to apply foryou send in a complete application package, you
relief under President Obama's sweeping plan, calledshould receive your answer within 30 days.
HAMP. Here is some information to help you determineHAMP has standard approval guidelines, and a 4 step
if you are eligible.formula is used to determine if the information you
The guidelines are standard for everyone, and underprovide fits into those guidelines. You can use this very
the federal plan lenders and servicers will be paid tosame formula to fine tune your budget so that you
modify qualified loans using a set formula. The goal ishave the best chance of fitting the program criteria.
to achieve a new payment that equals just 31% of theYou can take a lot of the confusion and frustration out
household gross monthly income. That figure includesof preparing an acceptable application by using a
the principal and interest, property taxes, homeownerssoftware program designed just for homeowners. The
insurance and any homeowners dues, if applicable. TheLoan Mod Quick App software allows you to simply
new mortgage payment will be arrived at by using ainput your income and expenses, and all the
sequence of options, in this order:calculations are done for you. Your debt ratio, new
target payment, new interest rate, disposable income
1. Reduce interest rate to as low as 2%, thenand more are computed automatically. You can see
2. Extend the loan term to 40 years, and finally ifimmediately where any adjustments might be needed
necessarybefore your lender reviews your information.
3. Forebear or defer some principalThe Treasury Department is also offering loan
The Treasury loan modification plan also includesworkout options to those struggling homeowners who
second loans as well as first trust deeds. Now whenare unemployed and who have lost significant equity in
the first lien is modified, the second lien will also betheir homes due to the housing crisis. This part of the
eligible for an interest rate reduction to as low as 1%,plan will offer temporary relief to give borrowers a
and in some cases the lender may retire the debtchance to find a new job and get back on their feet.
altogether in exchange for a government lump sumAlso, if you have at least 9 months of your
settlement. This part of the plan was implemented tounemployment benefits remaining, you may be eligible
encourage homeowners to continue making paymentsfor a loan workout plan.
on a home that has lost significant equity.The secret to success for homeowners needing a
Participating lenders are required to review everyloan modification is to prepare your paperwork before
applicant who requests help and determine theircontacting your lender. Take the time to work on your
eligibility. So, even if you have applied previously youfinancial statement ahead of time, so that you can
may request and apply for this Treasury Departmentmake any adjustments required to meet the approval
loan modification plan. You will be asked to completeguidelines. When you understand what your bank is
an application that includes a financial statementlooking for to approve your loan workout, you will have
outlining your income and expenses. You must alsoa much better chance of completing your paperwork
provide proof of you income, including tax returns. Acorrectly.