Federal Government Giving Up To $75 Billion Dollars In Loan Modifications – Do You Know About It?

To prevent between five and six million families from having their homes foreclosed upon, the Federal Government is willing to give out 75 billion dollars with a loan modification program. This is despite critics that question whether or not it will work because over half of the loans previously modified still went bad. To their own credit, they have changed a way that modifications will be done in hopes that this effort will work. There are a number of financial institutions that are taking part in this program that have agreed to follow the government's eligibility criteria for families.

To be eligible for this program, the loan has to have originated before January of 2009. Each year that you are a part of this program, you will have $1000 dollars knocked off the principle while the servicing bank is given that same amount by the government to replace it. In order to obtain these incentives, the homeowners must have already made three modified loan payments. The monthly payments themselves will be reduced to be 38% of or lower than the family's monthly gross income and the interest rate will be reduced by 2%.

To qualify for this program you must be able to prove that you are struggling with the payments or will be in the future. You will need to show proof of income along with other documents.

This program is running in hopes that families will stay in their homes as long as they can make the payments. If you think you would like to apply, check the Federal Government's website for all the rules of eligibility.

***Update***
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