President Obama's Direct Loan Modifications Plan
- By Wendy Moyer
- Published 06/15/2009
- Real Estate
- Unrated
President Obama's direct loan modifications for homeowners made home loan modification available from March 4, 2009 through the end of 2012. As a result, instead of facing the possibility of foreclosure, many homeowners whose mortgages are unaffordable can now get their mortgage loans modified in order to secure lower monthly mortgage payments.
How Can You Qualify for Direct Loan Modifications?
There are a number of primary qualifications the government mandates that you meet in order to be able to have your loan modified.
1. Under this plan, in order to qualify for a direct loan modification you must be both the owner as well as the occupant of the house. Therefore investment properties would not qualify.
2. The loans have to have originated before 2009 and had to be insured by either Fannie Mae or Freddie Mac.
3. Your mortgage payments also have to be more than 31% of your gross monthly income. The monthly mortgage premiums can include your property taxes, homeowner's association fees, and home insurance, in addition to the principal interest owed.
4. The remaining principal of your loan has to be less than seven hundred twenty-nine thousand, seven hundred fifty dollars ($729,750.00).
5. You have to work with a HUD approved counselor before you would be eligible to modify your home loan.
So, if you are not able to meet your monthly mortgage obligation, you should find a HUD approved counselor. You shouldn't have to pay for this counseling because any reputable counselor will offer their service free of
charge.
In the past it may have been a challenge finding such a counselor. However, it has become a bit easier because there are now additional monies being made available to HUD by the government.
What Information Will You Have to Supply for Direct Loan Modifications?
If you are employed by a third party you will need three things. You will have to submit form 4506-T, two recent pay stubs, and a copy of your most recent income tax return.
If you are self employed or unemployed you will need a verification letter from a reputable third party.
What Lenders Do With This Information
The information you supply will guide lenders as to the amount of your modified monthly payments. Although they will keep your payments below 31% of your gross monthly income, they do have some flexibility.
Why Are Lenders Willing to Offer Direct Loan Modifications?
Under President Obama's plan, your lender gets a $1,000 incentive bonus for each referral that is eligible to become part of the modification program.
Then, once your loan is modified, your lender will receive additional incentive payments of $1,000 if you stay current on your payments.
In addition, lenders are willing to modify loans because under a new set of rules called the Standard Waterfall, lenders will adjust your loan and then determine if the incentive payments they will receive by offering direct loan modifications would be more profitable than foreclosing on properties.
Given the state of the current real estate market, many homeowners that are financially challenged should end up receiving lower mortgage payments once they go through the process.
How Can You Qualify for Direct Loan Modifications?
There are a number of primary qualifications the government mandates that you meet in order to be able to have your loan modified.
1. Under this plan, in order to qualify for a direct loan modification you must be both the owner as well as the occupant of the house. Therefore investment properties would not qualify.
2. The loans have to have originated before 2009 and had to be insured by either Fannie Mae or Freddie Mac.
3. Your mortgage payments also have to be more than 31% of your gross monthly income. The monthly mortgage premiums can include your property taxes, homeowner's association fees, and home insurance, in addition to the principal interest owed.
4. The remaining principal of your loan has to be less than seven hundred twenty-nine thousand, seven hundred fifty dollars ($729,750.00).
5. You have to work with a HUD approved counselor before you would be eligible to modify your home loan.
So, if you are not able to meet your monthly mortgage obligation, you should find a HUD approved counselor. You shouldn't have to pay for this counseling because any reputable counselor will offer their service free of
In the past it may have been a challenge finding such a counselor. However, it has become a bit easier because there are now additional monies being made available to HUD by the government.
What Information Will You Have to Supply for Direct Loan Modifications?
If you are employed by a third party you will need three things. You will have to submit form 4506-T, two recent pay stubs, and a copy of your most recent income tax return.
If you are self employed or unemployed you will need a verification letter from a reputable third party.
What Lenders Do With This Information
The information you supply will guide lenders as to the amount of your modified monthly payments. Although they will keep your payments below 31% of your gross monthly income, they do have some flexibility.
Why Are Lenders Willing to Offer Direct Loan Modifications?
Under President Obama's plan, your lender gets a $1,000 incentive bonus for each referral that is eligible to become part of the modification program.
Then, once your loan is modified, your lender will receive additional incentive payments of $1,000 if you stay current on your payments.
In addition, lenders are willing to modify loans because under a new set of rules called the Standard Waterfall, lenders will adjust your loan and then determine if the incentive payments they will receive by offering direct loan modifications would be more profitable than foreclosing on properties.
Given the state of the current real estate market, many homeowners that are financially challenged should end up receiving lower mortgage payments once they go through the process.
Wendy Moyer
And for more information about direct loan modifications go to http://www.MartinWorldwide.net/index.php now. Wendy Moyer is a professional writer.
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