If you are wondering about loan modification requirements you are not alone.  Under Obama’s new plan there are several requirements, the first of which is that the mortgage must be on the borrower’s primary residence.  The next stipulation is that the borrower’s mortgage payment must exceed 31% of their gross monthly pay.  Most lenders require a certain ratio criteria used to qualify you for a new lower payment. For example, a range between 38% and 45% is usually acceptable.

The modifications that can be considered include low interest rate, fixed rates and lower monthly payments.  Jumbo loans that exceed Freddie or Fannie upper loan limits are not eligible for the program.  Although these are the quidelines set forth, the ultimate decision comes from your lender.  The timeframe to complete a modification in many cases is 30-45 days. To be successful you must convince them of your need for a new lower payment.

There is no requirement for lenders and banks to participate in loan modification programs.  This program is totally voluntary.  The benefit to lenders is the government subsidy that they receive for each loan modified.  They receive two types of financial incentive.  First they receive $1,000 for each loan modified and second they will receive an additional $1,000 every year for the next three years that the borrower does not fall behind on the loan.

Many people today face a common problem with their current mortgage situation.  With real estate prices falling sharply people are upside down in the homes financially.  Basically they are in a situation where the amount owed is more than the house is worth.  Borrowers can still successfully refinance into either a 30 year of a 15 fixed rate loan if the amount owed on the first mortgage is not in excess of 105% of the current value of the home. This refinance option is open to only to borrowers with conforming loans that are owned or guaranteed by Fannie or Freddie.  If you believe you can qualify for this program, please contact the company to whom you make your mortgage payments to start the process.

Typically delinquent borrowers eligible for assistance will be contacted by their mortgage servicer, this typically happens after missing two full payments. The truth is that the eligibility requirements are constantly changing and differ among lenders.

This entry was posted on Monday, April 6th, 2009 at 10:39 pm and is filed under Loan Modification. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.