Obama’s Loan Modification Plan  Offers Homeowners 3 Options — Which One Is Right For You?

Financially distressed American homeowners can get relief through President Obama’s loan modification plan. The Treasury Department is offering three options; depending on your situation, you could be eligible for one of them. $75 billion has been budgeted to bail out homeowners stranded by the foreclosure crisis. Learn the choices so that you know which one could give you the help you need.

Loan modification plan, option number one, gives mortgage holders a chance to refinance their loans using current low interest rates. To be eligible for this option, you cannot at present owe more than 105% of your home’s current market value. Also, you cannot be late on making your mortgage. This refinance plan applies only to your first trust deed, and if you have a second mortgage loan, then the lender must agree that option number one will be paid first.

Loan modification plan, option number two, offers qualified homeowners a loan modification program with interest rate reductions as low as 2%, with the terms of the loan extended to as long as 40 years, and some deferral of principal on their first trust deeds. The target payment under this plan is 31% of the mortgage holders’ gross monthly income. If there is a second loan on your home, the plan now requires a modification on that loan as well, with interest rates as low as 1% or 2%. The debt may be erased completely in some cases.

Lending institutions receive an incentive payment from the Treasury Department for each completed loan modification. Borrowers who meet the terms of their modified payment scheme are also eligible for up to $6,000 over the next five years. If you owe too much on your home, or if you have a delinquent payment history, the Home Affordable Modification might be the option for you. You need to know the requirements for approval, and how to prepare your application accordingly, before you call your lender to apply. Take time and be careful not to make any mistakes. Make sure that you know how to qualify.

Loan modification plan, option number three, is a deed in lieu of foreclosure or a short sale. Now, the federal government grants a $1000 payment to lenders who allow a sale in which the proceeds are less than the total still owed on the property. In this case, the government shares the cost of eliminating second liens against the property as well. If a short sale does not happen, then the homeowner can surrender the keys and transfer the house without going through foreclosure proceedings. Such borrowers may qualify for $1500 in relocation expenses.

All three options under President Obama’s loan modification plan encourage lenders to work with borrowers by offering financial incentives to find a solution quickly. Still, not all borrowers will qualify. If you are facing financial distress, learn more about the programs to see how you might qualify for help. You will need to spend some time and effort to prepare before you contact your lending institution. The federal government wants home lenders and borrowers to work together, directly, rather than through third-party loan modification corporations. This is because those middlemen companies charge borrowers large fees. If you learn how to get help, you can deal directly with your lender. Learn how to prepare, so that you can get your life back on firm financial footing.

What Homeowners Need to Know about Wells Fargo Loan Modification Terms and Requirements

Wells Fargo is participating in the Obama loan modification plan. Mortgage borrowers in financial distress may qualify for a lower mortgage payments via this federal program. This could be a worthy option if you cannot refinance your bad loan or sell your home in the current market. A Wells Fargo loan modification does not require any particular credit score, nor does it require that you have any equity in your home. In fact, under the federal guidelines for less equity you have, the more likely it is that you will get a more affordable loan payment. Mortgage delinquency is not a requirement for this program. However, if you are currently delinquent, that will not hurt your chances. Below are the basic requirements and terms of the Obama loan modification program.

You’ll need to demonstrate a change in your financial situation, resulting in your current mortgage payment no longer being affordable. There are many qualifying reasons, such as a rate increase on an adjustable loan; a reduction in income or loss of employment; unforeseen medical expenses; separation or divorce; or military service. You need to submit a financial hardship letter describing the current situation, then submit this, along with your application and other paperwork. A successful hardship letter contains some critical elements, but it is not that difficult to write. Just be sure that you cover your situation, completely and succinctly, to stand the best chance of gaining your bank officer’s empathy and cooperation.

You must also prove that your income is enough to cover your current debt load as well as the new lower monthly payment. Clearly, if the bank lowers your mortgage payment, they want to be certain that you will not get into financial trouble again. to assure your lender of this, you need to submit a budget, or financial statement, setting out in detail. Your income and expenses. Exclude all luxury items or unnecessary expenses from this statement. Wells Fargo needs to be assured that you are doing everything you can to keep your home, and that home ownership is your top priority.

Depending on which federal program to qualify for, the terms of a loan modification will vary. Currently, the most aggressive option is called Home Affordable. This option is available for homeowners who meet specific guidelines, which you should learn about on your own before you approach Wells Fargo. If you qualify, this loan modification program offers interest rates reduced to as little as 2%, and loan turns extended for as long as 40 years. The Treasury Department is paying the lending banks incentives for approving homeowner loans that are successfully modified, so as long as you qualify under the limitations of Home Affordable, you stand a good chance of approval, as the lenders are motivated. Just be sure to do your homework before you approach your bank.

Keep your home by ensuring that you are prepared and ready to deal with Wells Fargo. When you go into apply for your Wells Fargo loan modification, be sure you complete your paperwork properly and know what to say to the lending officer. Even qualified borrowers can be refused for this program if they make mistakes. However, should not have to pay high fees to an attorney or other middleman company. In fact, the government discourages this. Guidelines are not that difficult to follow — just be sure to (a) take your time, (b) ask any questions you may have before you approach Wells Fargo, (c) complete the forms entirely, and (d) have your supporting paperwork in order. Understand the basics, so that it is as easy as possible for your lender to approve your application, and you stand a good chance to get the help you need.

After participating in alleged unethical lending practices, one of the country’s largest lenders, Countrywide, became infamous.  Some of Countrywide’s complaints were due to poor internal communication, which meant borrowers heard a different story every time they talked to a different customer service representative.  As a result, complaints about Countrywide’s errors and stories about spreading untruths have become commonplace and spread quickly.

In July 2008, Bank of America took control of Countrywide.  Then in October they announced a plan to help fix past mistakes, particularly those done to homeowners.  The long and the short of it is that Bank of America wants to help homeowners meet their mortgage obligations and subsequently keep their homes.

After a lawsuit was filed against Countrywide, a statement was released, both by the company and by Bank of America, outlining plans to help homeowners who were struggling to pay their mortgages through consistent home loan modification practices.  While Countrywide customers have heard of this plan, most do not understand how things have changed or how they can take advantage of these changes.

When the monthly payments were too high, the new plan sets the debt to income ratio at 34%.  After the loan is modified, a step-rate program is put in place to slowly lower the interest rate until the mortgage is reduced to an amount that is manageable.  This is only available to homeowners who are living in the house they own.

There are some options available for those interested in Countrywide’s new plan.  Under the FHA loan-refinancing program, HOPE for Homeowners, borrowers who were not eligible for refinancing previously, have new ways to approach a loan modification.  It was after so many people lost their homes, or lost home equity, in the recent real estate crash, that HOPE was conceived.  The condition is that you have to sell your home and give FHA a portion of any accrued equity.  If you do not qualify for HOPE, there are other loan modification processes you can access, initiated by Countrywide, including reducing interest rates and principal forbearance.

If you are having trouble paying your Countrywide mortgage, you definitely should investigate their loan modification program. Bank of America has made the situation at Countrywide better due to its 2008 news release.  There is a way to help homeowners renegotiate their present loans, and you won’t know if you qualify for them if you don’t apply.  Countrywide is also currently reviewing its mortgages and sending letters to borrowers who are two months behind in their payments and in danger of losing their homes.

The only way you can know if a Countrywide home loan modification will help you is if you contact Bank of America or Countrywide to get the information.

You have always been able to modify your mortgage loan, now however, since President Obama’s Making Home Affordable plan was introduced in March, this process has become much more common.  The method of obtaining a modification has been made quicker and easier.  It isn’t nearly as hard to renegotiate the terms of your loan today.  If you think a home loan modification might be the thing for you, the first thing you need to do is seek some help in the form of home loan modification hardship assistance.

Is it getting harder and harder to make your monthly mortgage payments?  If so, you need to do something about this quickly.  Don’t feel you need to wait until you are falling behind.  Make an appointment to see a financial counselor to talk over your financial situation while there are still things you can do to make it better, before foreclosure begins to rear its ugly head.  There are a lot of charity groups that will give you advice.  You can find one through your HUD office.  So many people need help these days that it is very easy to find a for-profit loan modification company as well.

You can decide between using a free or paid service.  There are pros and cons to both.  Whatever you decide, understand that you need to carefully investigate whatever company you choose to work with.  There are some companies that work with lawyers and some that do not.  If you can, use a company that employs an attorney so he can advocate on your behalf.

If you opt to pay a loan modification company, choose carefully.  You are putting your home and your future on the line.  There are some companies that will take advantage of desperate people and you don’t want to be their next victim.  Choose a company with a good reputation and a long history.  The company should be professional and have a good rating with the Better Business Bureau.

After you select a company to work with, make an appointment and talk to a counselor.  Bring your paperwork to the meeting and be ready to dive into all your financial history.  The counselor will help you make sense of your financial situation and explain all of your options.

If the counselor feels you are eligible for a loan modification, he will direct you to write a loan modification hardship letter.  This letter is written to your lender and explains why you feel you need a loan modification.  Make sure you explain why you are in need of this modification, such as a layoff, divorce, illness or death.  Attach all relevant financial information.  Your counselor will help you compose this letter.  When it is done, your counselor will send it to your lending institution and advocate for a loan modification on your behalf.

If paying your monthly mortgage bill is stressing your budget or is simply becoming impossible, you need home loan modification hardship assistance. You can learn how to select and work with a loan modification company here.

How to Get Home Loan Modification Hardship Assistance

While loan modifications have always been available, since the introduction of President’s Making Home Affordable plan in March the idea has become more common.  The process has been made faster and more efficient. It has also become much easier. The first thing you need to do if you think this might be the answer to your financial difficulties is to get home loan modification hardship assistance.

As soon as you start to get concerned about paying your mortgage payments each month, you need to take action.  Do not wait until you are behind or have missed some payments, don’t even wait until you have missed even one.  Consult with a financial counselor to discuss your financial situation while you still have a chance to do something about it.  There are some companies that will give you advice for free and others that will charge.  Companies that work for free are generally charity organizations.  However the recent demand for this service has lead to a sudden increase in loan modification companies.

However you choose to proceed, you need to know there are pros and cons to both paid and unpaid services.  Take the time to research the company that will be dealing with your finances.  Some loan modification companies work with lawyers that are available to work with you when you are trying to appeal to lending institutions.  If possible work with a company that employs an attorney.

Be careful who you work with, especially if you are paying for the service.  There are many unscrupulous people who will not think twice about ripping off unsuspecting homeowners, who are in a desperate situation, don’t be one of their victims.  Choose a firm that has a good reputation and has been in business for a while.  Check with the Better Business Bureau to check their history and rating.
After you pick a company, set up a time to talk to an advisor. Bring all the needed paperwork and be prepared to discuss your finances in detail.  The counselor’s job is to learn about your finances and to teach you about your options.

If all goes well, and you are a candidate for loan modification, the counselor will help you write a loan modification hardship letter. This letter will be sent to the lender and should explain the hows and whys of your current financial situation.  Focus on the circumstances that caused your mortgage bill to become a burden (layoffs, divorce, illness, death…) and attach your financial information.  Your counselor will help you write this letter and when it is done, send it off to your lender and work on your behalf throughout the process of loan modification.

If you find you cannot make your monthly mortgage payments, you may qualify for loan modification hardship assistance.  Learn how to choose and work with a loan modification company here.