Federal Government Loan Modification Program -- How Do You Qualify-_48319

The federal government has allocated $75 billion for the express purpose of helping American homeowners avoid foreclosure through its loan modification program. Millions of families will get a lower monthly mortgage payment, in order to help them stay in their homes. Not everyone will qualify under this plan, but the guidelines are pretty straightforward.

Here are the basics for eligibility under this program:

-- only a homeowner's primary residence is eligible;
-- only first mortgages are eligible; second trust deeds do not qualify;
-- it is necessary to demonstrate financial hardship either currently or impending;
-- it is NOT necessary to be delinquent on payments in order to qualify;
-- proof of income is necessary, along with specific qualifying requirements;
-- a complete loan modification application, along with all necessary documents, must be submitted to the lending bank.

You may wonder what the benefits are for qualified borrowers. The most obvious, perhaps, is an affordable payment of 31% of gross monthly. Additionally:

-- the plan offers reduced interest rates to as low as 2%;
-- the loan term duration may be extended to as long as 40 years;
-- the loan principal may be reduced, with the lending bank and government sharing the cost of reduction.

The loan modification program is voluntary, but most lending banks and servicing agencies are expected to participate. Financial incentives, in the form of $1500 to mortgage institutions, and $500 to servicing agencies, should be sufficient to stimulate participation. Homeowners will benefit also -- mortgage holders who keep their payments current, under the modified loan's terms, will receive a financial incentive for each successive year, totaling $5,000 at the end of five years.

Lending banks and other institutions expect an enormous response to this program, so the time is now for all interested mortgage holders to begin locating the necessary documentation. Also, get the loan modification application forms. As soon as you can, look them over and make a list of any questions you may have. To succeed with your application, you will understand how to completely and properly fill out paperwork, and have your proof documentation together. This will ensure that your loan modification application is given the attention it deserves, and gets processed quickly by your lender.