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Get the Facts on the Home Affordable Loan Modification Program

Home Affordable Loan Modification

In a recent article we gave you the outlines for the first part of two programs of  the “Making Home Affordable Program”which have recently been released, the first one being the ”Making  Home Affordable Refinancing Program”

The other part of the program is the “Home Affordable Loan Modification Program” which appears to be aimed at homeowners who may not be able to take advantage of the new home refinancing program.

Below are the general guidelines for this program, if you feel like you might not qualify for the first program, perhaps this one will work  for you.

Home Affordable Loan Modification

• Home must be your primary residence only
• does not have to be a Fannie Mae or Freddie Mac loan
• no maximum loan-to-value
• maximum loan amount is $729,500 (for this new program; lenders may modify any loan size but will not recieve financial incentives under this program)
• may or may not be late on payments – lender’s option
• if your present loan is a Fannie or Freddie – owned loan, foreclosure proceedings are halted until a loan modification has been considered ( IMPORTANT NOTE: be sure to contact your lender or servicer concerning this particular issue and your home loan or any question regarding the foreclosure process)
• your present loan must have been obtained before January 1, 2009
• will require a “hardship letter”  and fully documented income
• homeowner will attend financialcounselling if total household debt service exceeds 55% of monthly gross income (debt-to-income ratio or DTI)
• lender will determine how to reduce the monthly payment to 31% of monthly gross income via rate reductions,principal reductions or other means
• lender will recieve financial incentives to successfully modify a loan
• lender participation is voluntary, not mandatory
• program ends December 31, 2012 and can only be used one time

The U.S. Treasury has put up a “Self-Assessment Tool” to help you determine your eligibility for either of these two programs.  CLICK HERE    for more information then click on Borrower Information: Making Home Affordable Refinance and Modifications Options. Then scroll down to “Who is Eligible” to access the “Self Assessment Tool”