Friday, June 26, 2009

Obama’s Federal Loan Modification Plan is Finally Here

Obama’s federal loan modification plan is a solution designed to help delinquent homeowners. Thanks to the introduction of this program, lenders will be more inclined to change the terms of a loan and make payments more affordable. Millions of borrowers need help, have defaulted on their existing mortgages and are losing their properties. Today they can qualify for loan modification and start anew.

One of the main eligibility criteria is having taken out the loan before the start of 2009. If you have a loan that originated before that period, then you can definitely consider the loan modification program. You can start considering a reduction of the interest rate, a lower sum to pay each month and also the possibility that the lender could forgive late payments. Reductions are also given for the principal, late fees can be forgiven and borrowers can finally stop dreading the legal actions which revolve around foreclosures.

President Obama introduced the loan modification plan in order to make the housing market stable and to help borrowers regain their stability as well. Borrowers can change the terms of their loans, extending the payment period and benefitting from a genuinely low interest rate. Qualifying for this program means that the monthly payments for the mortgage will only reach 31% of your gross monthly income. No more bad choices, no more debt and certainly no more foreclosures. Loan modification help is available and borrowers are definitely taking advantage of it.

Loan modification was introduced as an alternative to refinancing, as most homeowners' refinancing applications were rejected because there was no equity left on the house. Without taking into consideration the existence of equity nor the credit score of the borrower, the loan modification program imposes a series of eligibility criteria for anyone who wants to qualify. Two of these include the fact that one has to reside in the house and that the loan is guaranteed by Fannie Mae or Freddie Mac.

Barack Obama’s federal loan modification plan is promising, giving millions of borrowers out there a chance. It protects them from foreclosure, allowing them to repay their debt at a more comfortable pace and it is made with the intention of reducing interest rates on home loans. Most lenders have already agreed to take part in the loan modification plan, preferring to negotiate with the borrower rather than foreclose on the property and lose an important part of the amount owed.


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