| President Obama's Making Home Affordable loan | | | | - Longer loan term to 40 years |
| modification plan seeks to help up to 5 million | | | | - Principal forbearance |
| homeowners facing the possibility of losing their | | | | - Principal forgiveness (not mandatory and at lenders |
| homes due to unaffordable home loans. The plan is | | | | discretion) |
| funded by $75 billion dollars and offers a unique | | | | - Second loans are now eligible for modification under |
| feature that pays lenders, servicers and borrowers | | | | this plan |
| to participate in the loan workout program. To date, | | | | A Pay-For-Success feature allows for lenders and |
| only a little over $1 billion has been used, so there is | | | | servicers to be paid incentives and given other |
| still plenty of funding to help at-risk homeowners with | | | | inducements to offer this program to their |
| a loan workout. Here is some information on the | | | | borrowers. Homeowners who maintain the new |
| plans major features and who will qualify for this loan | | | | modified loan payments will be given up to $5000 in |
| modification program called HAMP for short. | | | | principal reduction to their current loan to help rebuild |
| Minimum eligibility criteria for Making Home Affordable | | | | equity. |
| loan modification: | | | | Interested homeowners can find out if they might |
| | | | qualify for this loan modification program by figuring |
| 1. Primary residences only & one-to-four unit | | | | their debt ratio and determining if it is possible to |
| properties only | | | | reach their target payment based on 31% of their |
| 2. Unpaid principal balances to equal $729,750 or less | | | | gross monthly income using the options mentioned |
| (higher for 2-4 unit properties) | | | | above. Do you know how to compute your debt |
| 3. Loan must have been originated before January 1, | | | | ratio to pre-qualify yourself before you contact your |
| 2009 | | | | lender to apply? Take advantage of a software |
| 4. Current mortgage payment (including taxes, | | | | program designed just for homeowners that mimics |
| insurance and Homeowners Association if applicable) | | | | the formula for HAMP approval. Simply input your |
| must equal more than 31% of the borrowers gross | | | | own income and expenses and the calculations are |
| monthly income | | | | done automatically. See your debt ratio, new target |
| 5. Borrowers are not required to be delinquent on | | | | payment and interest rate and more immediately. |
| their payments to participate | | | | You can then fine tune your financial statement so |
| 6. Borrowers may not be in bankruptcy | | | | that it meets the approval guidelines easily and |
| The program is free, and the Treasury Department is | | | | quickly. |
| warning homeowners against paying anyone a fee to | | | | Successful candidates will be able to provide their |
| participate in the loan workout plan. Obama's loan | | | | bank with all of the necessary paperwork, and |
| modification plan-HAMP- calls for a reduction of the | | | | complete their loan modification forms accurately so |
| mortgage payment to equal 31% of the | | | | that they meet the approval guidelines. Now is the |
| homeowners gross monthly income, to be arrived at | | | | time to begin to learn about how the process works |
| by: | | | | so you can increase your chances of getting the loan |
| - Interest rate reduction to as low as 2% | | | | workout you need to stay in your home. |