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Debt Relief – Insolvency – Bankruptcy Information » Mortgage Refinancing » Loan Modification Eligibility Requirements under Making Home Affordable Program

Loan Modification Eligibility Requirements under Making Home Affordable Program

Article by Simon Volkov

Borrowers who desire a loan modification might qualify for Obama’s Making Home Affordable programs. Lender participation is voluntary, so borrowers should first contact their mortgage service provider. Once lender participation is verified, borrowers should take time to understand how Making Home Affordable programs work and the process involved.

 

Homeowner’s must meet loan modification eligibility requirements and undergo a financial audit. Mortgage lenders must verify income to determine if borrowers can afford modified loan payments. Borrowers are subjected to a loan approval process similar to the one they underwent when originally applying for the home loan.

Homeowners should organize financial records prior to apply for a loan modification. Lenders usually require payroll records, bank statements, list of expenses and a current tax return. Some lenders require borrowers to provide IRS form 4506-T to obtain a certified tax transcript.

Tax transcripts are also used to verify the amount of reported income on the original mortgage note. Borrowers who inflate income could face mortgage fraud charges, therefore it is crucial to be honest when applying for home loans, loan modifications or mortgage refinance.

When banks enter into loan modification they alter mortgage terms to reduce payments. The Making Home Affordable programs require banks to reduce monthly mortgage payments to 31-percent or less of borrowers’ gross income. In order to meet loan payment criteria, banks temporarily reduce interest rates and extend loan payments up to 40 years.

A unique feature of Making Home Affordable loan modification program is mortgage lenders and borrowers can obtain cash incentives for participating. Banks can receive a maximum $ 3000 incentive, payable at $ 1000 per year. Borrowers can receive a maximum payout of $ 5000, paid at the rate of $ 1000 per year. To receive cash incentives, borrowers must remain current with home loan payments. Just one late payment will void the monetary incentive.

Homeowners struggling to meet monthly mortgage obligations must be proactive to resolve lending issues. Once properties fall into foreclosure the options to save them are limited. Making Home Affordable will soon be offering a foreclosure alternative program for borrowers who do not qualify for modified loans or refinancing.

Borrowers should beware of solicitations charging fees for home loan modification and foreclosure assistance programs. The U.S. government has earmarked billions of dollars for the Financial Stability Act to provide no-cost assistance for loan modifications and mortgage refinance.

Additionally, the Department of Housing and Urban Development offer low- or no-cost housing counseling to borrowers struggling to pay mortgage installments. A list of approved housing counselor agencies is provided at HUD.gov.

If your mortgage financier is not participating in Making Home Affordable programs, they can advise of loan modification and mortgage refinance options. Details of Obama’s loan modification program are provided at MakingHomeAffordable.gov.

Real estate investor, Simon Volkov, provides additional information regarding loan modification programs, along with insights about Making Home Affordable programs via his website at www.SimonVolkov.com.

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