The loan modification program is now more attainable for homeowners who cannot keep up with their monthly mortgage payments. The Obama’s Home Affordable Loan Modification Program has made the requirements to qualify for home loan modifications easier to see.
The Home Affordable Modification Program hopes to help between three to four million homeowners in need between 2009 and 2012. The $75 billion plan is in response to the property values that are decreasing rapidly and the financial situations many homeowners are in who cannot make their mortgage payments on time. Lenders would like to be able to make some money, even if it isn’t the full amount. With the plan the lender will receive $1,000 for 3 years per mortgage they successfully negotiate.
With the Home Affordable Modification Program the loan is extended between five and forty years and the homeowner pay lower monthly mortgage payments, the interest rate is lowered according to how much financial trouble the homeowner is in. The rate the homeowner pays rises the last five years so that the lender can make up some of money owed by the homeowner.
If homeowners do not qualify for the Home Affordable Loan Modification Program, they can try to refinance under the program. The refinancing portion is for those homeowners whose property value is falling. Both the modified loan and refinancing programs are helpful for different scenarios.
Lenders are slowly coming around to accepting modification applications, and acceptance for the homeowner is not instant. With the new plan the lenders take a financial hit as the interest rates are lowered and not all homeowners will pay on time every month, so the $1,000 bonus is not guaranteed. The system will eventually work out for everyone.