Is The Housing Bailout For You? – Loan Modification Help Center
The new housing plan announced by President Obama last week has two main parts. First, there is a $75 billion loan modification plan and, second, there is a program that helps borrowers who are not in danger of defaulting refinance their mortgage.
These are some of the key questions to ask to determine if you can benefit from the plan:
Do I have to fall behind on my loan payments to be eligible for a loan modification?
No. Borrowers must simply demonstrate that they are in danger of falling behind on their mortgage and that they don’t have sufficient income to make future mortgage payments. Borrowers with ballooning mortgage payments or interest rates that are resetting may benefit from the new plan.
What are the loan modification requirements?
To be eligible for modification under the plan, the loan must be a first mortgage on the borrower’s primary residence. Borrowers must currently be paying more than 31% of their monthly gross income toward mortgage payments. Jumbo loans that exceed Fannie or Freddie loan limits are not eligible. Ultimately, your eligibility will be determined by your mortgage lender.
What if I am “under water” and my mortgage is more than the value of my property?
As long as the amount owed on a first mortgage does not exceed 105% of the home’s current value, borrowers with limited equity can refinance into a 30-year or 15-year fixed-rate mortgage. This refinance option is open to only to borrowers with conforming loans that are owned or guaranteed by Fannie Mae or Freddie Mac. Borrowers must show that they are current on mortgage payments and that they will be able to meet the new mortgage payments.