| President Obama's Federal Loan Modification Plan | | | | many potential borrower loans would greatly exceed |
| proposes to help homeowners afford their monthly | | | | that percentage and sadly, they do not qualify for |
| mortgage payments and to stop foreclosure by either | | | | refinancing and they will not be able to stop |
| modifying the terms of the mortgage loan or | | | | foreclosure. |
| refinancing the entire mortgage. Obama Federal Loan | | | | Under the current Plan there is no forgiveness of the |
| Modification Plan is not only intended to help | | | | loan balance on a refinance, however, interest rates |
| homeowners in default and subject to possible | | | | will be reduced so that the payments are no more |
| foreclosure but also those that are not currently in | | | | than 38 percent of a mortgage's gross monthly |
| default but whose circumstances qualify for an | | | | income. The government would then provide the cash |
| assessment evaluation that they are at risk of | | | | incentive which would reduce the payments to no |
| defaulting on the mortgage payments. | | | | more than 31 percent of the family gross monthly |
| Under the Plan, however, the bulk of the funds will be | | | | income |
| provided to investors and lenders that will be provided | | | | Each lender would determine whether the cost of the |
| certain incentives to help homeowners to stop | | | | foreclosure would be greater than the cost of a |
| foreclosure, but still not forced to participate in the Plan. | | | | modification. Where the cost of foreclosure is less, the |
| Currently under the United States Bankruptcy Laws, | | | | loan would not qualify to and the lender is not forced |
| homeowners cannot modify second mortgage real | | | | to modify. Obama Federal Loan Modification Plan also |
| estate loans secured by their homes. The Modification | | | | contains a financial hardship-counseling component for |
| Plan proposes an amendment to the Bankruptcy Code | | | | those borrowers who need help because of debt in |
| allowing the Court to modify the terms of the | | | | addition to the mortgages. Those borrowers who have |
| mortgage based on the value of the property and the | | | | total debt equal to 55% or greater of their monthly |
| borrower's ability to pay, that way helping more | | | | income are required to enter into a debt-counseling |
| homeowners to stop foreclosure. | | | | program before qualifying for a loan modification. |
| As I said before; Investors and Lenders are provided | | | | Because home values have fallen so dramatically |
| large incentives to participate but not forced to | | | | around the country, Obama Federal Loan Modification |
| participate in President Obama Federal Loan | | | | Plan simply does not apply to over an estimated 15 |
| Modification Plan. As a result, because of concerns of | | | | million homeowners whose mortgage loans far |
| re-default and the fact that they cannot receive the | | | | exceed the current home value. Because the |
| cash incentives until the modified loan payments have | | | | homeowner still needs to qualify for a refinance or |
| been made for at least three months many investors | | | | modification even at lower rates, those families facing |
| and lenders have not gone forward with modifications | | | | default due to lack of sufficient income from |
| to stop foreclosure and help homeowners. | | | | unemployment or illness will not be able to stop |
| Under Obama Federal Loan Modification Plan, a | | | | foreclosure under the Plan. |
| borrower can qualify to refinance the loan and lessen | | | | Even if you don't qualify for the Obama Federal Loan |
| the payments if they owe more than 80% of the | | | | Modification Plan you may still be able to stop |
| value of their homes. Normally a bank will not approve | | | | foreclosure for a very long period of time in most |
| a refinance when there is less than 20% equity in the | | | | cases over 2 years and a half, even without paying |
| home as measured against the mortgages and liens | | | | any mortgage monthly payments. This could get you |
| on the property. | | | | the time you need to get back in your feet and qualify |
| In addition to all the above, the Obama Federal Loan | | | | for a loan modification program. |
| Modification Plan will assist, as well, those borrowers | | | | In order to do this you need to know how to proceed |
| who are not in default of payment and whose loans | | | | and what to do in every situation, otherwise you will |
| are either held or guaranteed by Fannie Mae and | | | | get foreclosure in a very short period of time, loosing |
| Freddie Mac. | | | | your home forever. Once you know how things work, |
| Although there are some exceptions for certain | | | | and how certain laws protect you against lenders, you |
| locations, Obama Federal Loan Modification Plan | | | | will be able to stop foreclosure and stay in your home |
| generally places a cap on the refinanced mortgage of | | | | for a very long time, and best of all, you do not have |
| 105% of the home value. If the home is worth 100 | | | | to pay lawyers or agencies, when you know what |
| thousand of the refinanced loan, including costs and | | | | they don't want you to know, you will do this all by |
| expenses cannot exceed 105 thousand. Because | | | | yourself. |
| home values have plummeted around the country, | | | | |