Government Mortgage Loan Modification Program

Government Mortgage Loan Modification Program

The recent financial crisis created havoc in the real estate market forcing millions of people to foreclose their homes as they were unable to pay off their mortgage. Also, due to the rise in unemployment following the recession, people found it harder and harder to pay their monthly bills and this led to a downfall in the housing market.

Keeping this in mind and the deteriorating condition of the real estate market, the Obama administration launched a mortgage modification plan that allowed homeowners facing financial hardship to lower their monthly installments. The government mortgage loan modification program simply reduces the interest rate on the loan or increases the term of the loan to make the monthly installment affordable for homeowners and ensures that the new payment does not exceed 31% of the homeowner's monthly income. This program has been sanctioned around $75 billion to help people save their homes from foreclosure.

The government mortgage loan modification program has few basic requirements such as the homeowner should be facing financial hardship, the house should be the primary residence and the monthly installments should be more than 31% of the monthly salary. If these conditions are fulfilled and a complete and proper application along with financial statements depicting monthly income and expenses is presented, the loan modification might get approved very easily.

On average, the approval of modification may take around 60 to 90 days and during this period the foreclosure of the home is stopped before the eligibility is determined. Generally, people believe that a loan cannot be modified if the current loan value is upside down; however, such a condition exists in the case of mortgage refinancing rather than mortgage modification.

Some people also do not apply for government loan modification programs believing that only those people can apply for loan modification who are three months behind on their payment schedule. To qualify for a mortgage modification program, you may just need to prove your financial hardship and you may be granted the modification even if your loan is not in default yet.

Therefore, if you haven't been applying for the government mortgage loan modification program because of the above mentioned myths, you can apply today and save your home from foreclosure.

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