Obama’s mortgage modification program is only available for mortgages that were secured prior to the 1st of January 2009. The program requires that the mortgage one has to pay be below a specific sum ($729,500), that one live in the property in question and that one can present all the necessary documents for the application. In order for someone to be accepted into the loan modification program, he/she has to be able to prove that there is a situation of financial hardship and that the debt surpasses an important percentage of their income.
The eligibility criteria for the loan modification plan have been presented in a great number of online resources, in the newspapers and media. The advantage is that millions of Americans who are tired of being in debt and who want to avoid foreclosure qualify for the loan modification program. In the end, who would want to move out of his/her home and undergo such a traumatizing ordeal?
At first, lenders were reluctant to join in the loan modification program, given the fact that they would receive a much smaller amount of money from the borrower. Upon preparing the plan for presentation, the Obama Administration included a clause that offers cash incentives to lenders who participate in the program. The bonus encourages lenders to take part and negotiate with borrowers the modification of their loan.
This is not the first attempt to come up with a loan modification plan but the truth is that none of the previous ones was half as smart as the one designed by President Barack Obama. Millions of home loans are expected to be modified to the advantage of the borrower, monthly payments being effectively reduced and made more affordable. Even though the program encourages a slow approach to the housing crisis, it is estimated that an impressive number of homes will be saved from foreclosure this way.
Before one is accepted into Obama’s mortgage modification program, one of the first steps is to calculate ones’ monthly income and debt ratio. After the determination of these two things, the lender will negotiate with the borrower and bring the monthly payments to 38% of the income. The interest rates will be reduced and the government will step in to bring that to 31% of the gross monthly income. Everyone contributes to eliminating the effects of the economic crisis and to helping homeowners stay in their homes, just the way it is supposed to be.