Loan Modification Program by President Obama

A house owner who is on the verge of losing his house to foreclosure, or a house owner who has not missed any payments but wishes to refinance his home to lower interest rates, can officially call lenders and ask for loan modifications. The money required for this program will come from the 700 billion dollar fund which was approved as a portion of Tarp I in 2008.

President Obama recently announced this $75 billion plan to modify and refinance millions of mortgages under his administration. The plan is part of the Tarp II plan, which is comparatively much larger, and was briefly introduced by Timothy Geithner while addressing the nation on February 10, 2008.

This $75 billion scheme deemed as making homes affordable, promises to make house ownership more easy and affordable for an estimated 9 million people living in America.

This program combines both government incentives (for lenders, borrowers and servicemen) and services in order to reduce interest rates and lower the principals on large number of loans in America.

The whole program is basically divided into two different categories:

1)      For Current house owners: The affordable home refinance 2)      For struggling house owners : The affordable home modification

The affordable homes refinance:

The affordable Homes refinance part of this scheme aims at helping current house owners who have suffered loss of value in their houses, but are regularly paying their mortgage installments. It gives the borrowers, a chance to refinance their homes with little or no equity by giving them home loans backed by Freddie Mac and Fannie Mae.

Those people who haven't been able to refinance their mortgage into low interest rate loans due to lack of minimum required equity might now receive loans of up to 105 percent of market value of their homes.

There are various conditions which one needs to have positive response to before he can qualify for this program such as:

·         Is the house the primary residence of the person concerned? ·         Is he current and regular in making his mortgage payments? (Current here means that he should not be 30 more than one month late in making his mortgage payment) ·         Does the person have a Fannie Mae or Freddie Mac loan?

The affordable home modification:

The affordable home modification portion of the program provides various incentives to the servicers and mortgage holders return of modification of home loans into payments matching 31% of the gross monthly income of the borrower.

This program was designed to check millions of foreclosures for families who are on the verge of foreclosure and are struggling hard to meet their financial commitments.

In order to qualify for this program one should have positive replies to the following questions:

·         Is this house your primary residence? ·         Does the amount you owe on first mortgage equal to 729,750 dollars? ·         Have uncontrollable situations like medical bills etc increased the financial pressure on you ·         Have you had a significant reduction in your income after applying for loan etc.