Home Affordable Loan Modifications To Avoid Foreclosure

For all people who fall behind or are in risk of falling short in their payments because of financial crises, due to increasing payments because of resetting loan can apply for the obama loan modification program. The first mortgage payment is decreased to 31% of the gross income of the consumer. The treasury department and the servicers are coming together to make this possible. Get details of the Obama Home Affordable Loan Modification at www.refinanceitt.com. However, this loan modification program cannot really help those who are able to make payments for their home loan and those who do not occupy the house in question. Most servicers will take participation in this because of the incentive of the loan program, involvement of the government and standard modification model. You can avail a list of all the participant servicers from the treasury department online after the start of the program. The Home Affordable Loan Modification program helps you extend the foreclosure of your house until the trial period.

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In this process, all permitted costs are listed in to the modified note and the homeowners can pay nothing out of their own pockets. There are some terms and conditions on basis of which you become qualified for the loan modification program.

1. The house should be the primary residence of the owner and occupied with a mortgage originated prior to Jan 1, 2009, which has an unpaid amount less than $729,750.
2. You should have a mortgage payment which exceeds than 31% of your per month gross (pre-tax) income. Include the principle amount, rate of interest, taxes and insurance (PITI) when you are calculating the mortgage modification payment. This 31% does not consist of the private mortgage insurance (PMI) fees.
3. This program is specially set up to encourage services for loan modification prior to defaulted payments from homeowners, but you are still qualified even if you have defaulted on couple of payments.
4. All consumers who are bankrupt and who are following litigation associated with their mortgage can qualify for this program.

The working process for the loan modification program is very easy. Listed below are some important points for the same.

1. Initially you call up your respective servicer. They will ask you some questions regarding your finances. Your income will be verified along with your financial hardship and mortgage.
2. A copy of your recent tax return will be obtained from the IRS to cross check the income along with your latest pay stubs. You need to provide them a warranty that you do not possess enough liquid assets for payments.
3. Your payment will be decreased to 31% by the servicer and treasury department. If your percent is still above 31%, the lender will hold the principle balance. This forbearance will turn in to a huge payment because of the maturity date of the loan home loan modification, upon the sale of your property or on paying off the mortgage balance with interest bearing. However, the lender cannot withhold your principal amount to a level less than the present market value of your house.
4. The servicer can also make use of principle reductions on permanent basis to lessen you DTI as well. The permanent principal reduction does not have to be repaid. The servicers have to pledge your insurance and property taxes on the new loan irrespective of whether they were pledged before.
5. After your respective payment amount reaches 31% DTI and you have signed all the papers, you are introduced to a trial period of 90 days. If you are regular, until the end of this period, your loan is modified on permanent basis and you can start your new loan term.
6. To modify your modification loan, you are qualified for an incentive up to the limit of $1,000/year by the treasury department if you are regular in you payments. The incentive amount will last up to 5 years and it will be directly paid to the servicer to decrease the principal amount on your respective loan.

Keep in mind that the modified loans cannot be assumed. If it is not possible to reduce your payments to 31% DTI, you are eligible for mitigation program of traditional loss. Rather than a foreclosure, the program provides servicer incentives for a deed in lieu or a short sale. The reason why servicers actively participate is that they get paid for loan modification and even more if they succeed in doing so prior to default. They are paid, when the borrower pays on time each year. Because this loan modification program only works for first mortgages, they are given an incentive to decrease or get rid of their liens, if they are working with subordinate mortgage holders. To sum up in short the servicers will always earn more for homeowners who stay for the program rather than for foreclosure in major cases.