Financial Help to Stop Foreclosure

The Obama loan modification plan offers financial help to stop foreclosure for many distressed owners. If you qualify for the Obama home loan modification program, it is probably one of the most powerful ways to stop foreclosure, available to you.

There are many families in the USA today who would be able to successfully stop foreclosure by taking advantage of the Obama modification plan.

So the real question is - do you qualify for this government financial help to stop foreclosure?

Making Homes Affordable - Obama Mortgage Loan Modification Plan

1. You loan must be owned by Freddie Mac or Fannie Mae, or FHA insured.
2. You must own and be living in a one to four unit home.
3. Your outstanding balance on your mortgage principal debt must be less than $730,000
4. Your mortgage loan must have been in place before the end of 2008
5. You need to prove that your income has changed substantially for the worse eg if you can show a job layoff, this would be considered acceptable. Alternatively you need to demonstrate that you have experienced an unexpected and unavoidable increase in expenses.
6. Your mortgage repayments must be more than 31% of your gross income.
7. Even if you haven't missed a mortgage payment yet, you can use these steps to stop foreclosure from happening in the first place.

If you qualify then you can expect the following help with your mortgage:

Your monthly repayment will be lowered substantially until it is about 31% of your gross monthly income. This may mean that the bank will be forced to lower the interest rate as far down as 2%.

This loan modification will not incur any fees, but there are repercussions you need to be aware of. The modification is basically to allow short term relief, and this means that it isn't a free ride indefinitely.

The bank will most likely include terms and conditions which will require a balloon payment down the road, either when you sell and pay off your loan, or if your circumstances improve and you decide you want to and can afford to refinance.

In addition the loan rate will increase in five years time either back to the original interest rate before modification or to the prevailing interest rate, whichever is lower.

One huge benefit with this modification program is that the USA treasury will pay in a subsidy as part of the program, actually helping you reduce your principal debt.

You need to apply before 2013 to qualify.

As you can see the Obama administration is doing as much as they can to provide financial help to stop foreclosure to as many genuinely distressed home owners as possible.

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