You, in all probability, have seen quite a bit on the evening news or on the web regarding foreclosure prevention through federal loan modification or the Obama Housing Plan. The purpose of the Obama loan modification program is to save faltering homeowners from the misery of loosing their home. If you’re thinking of loan modification to prevent foreclosure and the loss of your home, it is urgent that you first understand how to qualify for loan modification in the first place. It’s important to note that each mortgage lender has their own guidelines in regards to loan modification, in most cases, there are three parameters that should be present in order to make a loan modification approval possible.
Federal Loan Modification Requirements- Homeowner distress. The homeowner should be experiencing some financial distress that puts their capability to make their home loan payment into question, or, an imminent increase in their adjustable mortgage rate that will increase their mortgage payments to a point where they are no longer affordable. There should be something that has changed in financial condition of the homeowner that has lead to or will lead to the eventuality that the homeowner will not be able to afford their home loan as it is.
- The loan-to-value ratio. In other words, how much equity do you have in your home? There should be a limited amount of equity in your house. This is because, if you have more than enough equity in your home to pay off you mortgage, the mortgage company could force you to sell your house (foreclose) if you are behind on your payments and have a lot of equity. Mortgage lenders would usually prefer to assist in a federal loan modification, as opposed to winding up with a short sale and greater losses.
- The income of the homeowner. You will have to establish with the mortgage company, by providing paycheck stubs and other documents that they may request, that your monthly income is substantial enough so that you will be able to make the new payments as proposed in your federal loan modification request or the Obama Refinance Plan . The mortgage will usually offer a loan modification approval only after they are positive that you will be able to manage your mortgage loan modification terms.
A home loan modification approval affords homeowners the opportunity to start out fresh, with a new home loan payment that they can truly afford. Loan modification and the corresponding negotiations are especially complicated, so it’s strongly advised that you negotiate with your lender using the service of an experienced loan modification attorney. Of course, do your due diligence and research the attorney or loan modification company that you plan to work with. You can look up the company name on BBB.org to make sure there are no complaints about them. An experienced loan modification attorney will have the required practical knowledge to negotiate the best mortgage loan modification for you. Your loan modification approval depends on choosing a reputable company.
Author: Betty Childers
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