| There is a standard formula that participating lenders | | | | |
| use to determine your eligibility under the Obama | | | | 1. Verify the existing payment equals more than |
| Home Affordable Modification Plan. The Treasury | | | | 31-38% if the household gross monthly income |
| Department has mandated that this formula be used | | | | 2. New target payment that equals 31% of the gross |
| when reviewing a borrowers request for a loan | | | | monthly income (can use all household |
| workout. Learn this basic 4 step formula and then | | | | income-including roommates) |
| you will be able to pre-qualify yourself and have a | | | | 3. Arrive at new loan terms to reach that target |
| much better chance of getting your proposal | | | | payment by first reducing interest rate to as low as |
| approved. | | | | 2%, extending loan term to 40 years, and deferring |
| The federal Home Affordable Modification Plan or | | | | or forgiving part of the the principal balance. |
| HAMP, is designed to provide an affordable and | | | | 4. Verify that the homeowners financial statement |
| sustainable mortgage payment for homeowners who | | | | information fits the debt ratio and target payment |
| are either delinquent or at imminent risk of becoming | | | | calculation |
| delinquent. The first criteria that must be met is an | | | | So, the way that you can be sure you have a very |
| evidence of a financial hardship situation. This could be | | | | good chance of approval is to learn the basics of |
| due to any number of circumstances, but the | | | | how to figure your target payment and debt ratio, |
| generally acceptable ones include: | | | | then fine tune your financial statement and make any |
| | | | necessary adjustments to your budget before you |
| 1. Reduction in income or loss of income | | | | send your proposal into your lender. Take the time to |
| 2. Change in the households financial circumstances | | | | learn and prepare, and you will have a very good |
| 3. Lack of sufficient cash reserves to pay mortgage | | | | chance of getting the help you need and deserve. |
| and basic living expenses-excluding retirement | | | | You can use the very same formula your bank will |
| accounts | | | | use when you prepare your own financial statement. |
| 4. Increase in Expenses | | | | It makes sense to fine tune your application so you |
| 5. Excessive monthly debt payments and over | | | | meet the guidelines. Take advantage of the software |
| extension with creditors | | | | program designed for homeowners to do all the |
| 6. Other reasons for hardship | | | | calculations for you. Avoid making mistakes that could |
| The standard formula used by lenders under the | | | | cost you the approval you need and deserve. |
| Obama Home Affordable Modification Plan is: | | | | |