Motivating both Homeowners and Mortgage Lenders
Mortgage lenders, because of the current recession, are hesitant in approving traditional mortgage refinance loans. Keeping this in mind, the Obama’s home loan modification program is providing cash incentives to the lenders and loan servicers. It gives them an incentive to work with you.
For each home loan modification application that is eligible and qualifies for the program, the lenders and providers get $1,000 as an upfront fee. If the borrower remains current in their monthly payments, the lenders and service providers will get $1,000 per year for up to 3 years.
The mortgage service providers who represent the lenders also get an incentive of $500 if they help the lender focus on the mortgage holders who try to be consistent and on time in their monthly payments. The mortgage lender will get $1,500 if the borrower modifies the loan prior to falling behind on the monthly payments.
The homeowners who are consistent in monthly payments on Obama’s Mortgage Loan Modification are eligible to take advantage of a reduction of $1000 per year in the principal amount of the loan for up to 5years.
Guidelines for the Obama Home Affordability Modification Plan:
Some of the guidelines for Obama’s Loan Modification Program are as follows
- The applicant should submit the latest tax returns, two of the most recent pay stubs and an “affidavit of financial hardship” which they can write themselves, explaining the financial hardships they have faced in recent months.
- The monthly payment is adjusted so it cannot exceed 31% of the current gross monthly income of the applicant and, because of this, the applicable rate of interest can go as low as 2%
- The home should neither be condemned nor vacant
- The home for which the Obama’s Loan Modification Plan is being sought should be a single family residence and not for commercial purposes
- The home should not be owned by the investor but be the primary resident of the homeowner
- The duration for repaying the loan can be prolonged to a maximum of 40 years
- The mortgage balance cannot be more than $729,750
- Obama’s Loan Modification current expires in December 31, 2012
- The first mortgage must have originated on or prior to January 1, 2009
- Homeowners who are current in monthly payments can get an annual reduction of $1,000 in the principal amount for a period of 5 years
