Obama’s Home Affordable Plan – Obama’s Federal Program For Troubled Homeowners
President Obama's new Federal plan, called Home Affordable, to assist homeowners facing difficulties in repaying their mortgages includes two options: refinancing and loan modification. You can choose the plan that suits you best based on the following details.
The Refinancing option of the Home Affordable plan is designed for those who are continuing to pay their mortgages but have been unable to obtain refinancing due to a drop in the market value of their homes. This refinancing is government-subsidized and covers a period of 15 to 30 years. The current market rate and closing costs are considered in this plan. You will benefit from this plan if you meet the following conditions:
1. You must not have defaulted for more than 30 days in the past year.
2. You must be using the home as your primary residence.
3. You must have owned the loan from Freddie Mac or Fannie Mae.
4. The amount due must not exceed 105% of the value of your home.
5. You must submit income proof showing that you can afford the new mortgage payment.
6. Only first trust deeds are covered by this plan. In the case of a second mortgage, the secondary lender must accept the renegotiated loan agreement of the first deed.
You should consider that if your existing mortgage provides for negative amortization by applying a significantly lower rate or if you are paying interest only, the renegotiated amount may increase. This plan aims to provide troubled homeowners with a loan bearing a fixed interest rate.
The second alternative of the Home Affordable plan concerning loan modification requires you to satisfy the following conditions:
1. You may not have obtained the mortgage from Freddie Mac or Fannie Mae.
2. The home must be used by you as your primary residence.
3. Your principal amount due must not exceed $729,750 if the home has one residential unit. The ceiling increases if it has more than one dwelling unit.
4. You must have taken the loan before January 1, 2009.
5. Your existing repayment payment, including all taxes and insurance, must be more than 31% of your gross monthly income.
6. You must prove that you are facing financial trouble.
If you meet all the above conditions, you have a good chance of qualifying for this plan. As the second option gives lenders an incentive from the Treasury Department, it is preferred by them. If you have not actually defaulted, you must prove that some financial crisis will prevent you from honoring your repayment commitment.
To secure relief under the Home Affordable plan, you need to submit a properly filled-out application and other financial documents supporting your claim. Processing delays can be avoided by filling in the application details correctly and comprehensively. Since this is the basic document on which your lender will decide your case, take care and devote enough time to it.
This loan modification program offered by the Federal government may help you keep your home.