President Obama's new Making Home Affordable (MHA) plan is designed to ensure that mortgage borrowers have a way through the current economic crisis. This loan modification plan has generated a lot of interest already. Here are answers to some common questions.
How Did This Loan Modification Plan Come About?
The Obama administration made it a priority to work out a loan modification plan for American homeowners. This plan, as part of the MHA program, became effective in March 2009. Through 2012, homeowners who qualify can rework their mortgage to bring monthly payments into line with their financial situation.
Who Is Eligible for a Modified Loan?
Only owner-occupied homes are eligible. Secondary property, investment property, and vacation homes are not permitted. Your loan must have originated prior to 2009 and must have a total principal not to exceed $729,750. To qualify, you must verify your current gross monthly income.
What Happens in the Loan Modification Process?
Your lending institution analyzes your current mortgage payment with respect to your gross monthly income, calculating what percentage of gross monthly income you currently use to make your monthly payment. Under MHA, eligible borrowers can reduce their loans to less than 31% of gross monthly income. Once the new monthly payment is determined, it remains fixed for five years.
What Pays for the MHA Plan?
There are two initiatives under MHA, each with a different purpose. Each branch has its own funding. The initiative that covers loan modifications is known as the Homeowner Stability Initiative (HSI). $75 billion comprises the HIS, funded by taxes. HIS is expected to assist three to four million homeowners between now and the end of 2012.
What Are the MHA Plan's Limitations?
Investment property is not eligible for this program. A credit check will verify the primary address of any loan modification candidate. Fannie Mae and Freddie Mac loans are eligible under this program, and each organization has a toll-free number you can use to verify your eligibility.
How Do I Receive a Loan Modification?
Start by contacting a HUD-approved financial advisor. Many different services, all at no cost to you, can consult with you to study your financial picture and advise you on how to proceed.
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