Home Affordable Modification Plan
The Obama Plan “Home Affordable Modification” Plan.
First of all, Who Won’t Benefit?
The plan is ambitious plan and the government’s Administrations goal is to help as many homeowners as possible. However, the program is voluntary, it is unknown yet how many borrowers it
will actually help. Previous efforts, such as the Hope Now program, helped only a fraction of the number of homeowners that were eligible, less than 500 homeowners nationwide.
The program is expected to benefit upwards of 5-10 million distressed homeowners in need of a loan modification program. A small percentage of loan modification San Diego homeowners will benefit from this program
It is unknown how many eligible homeowners will be helped by the program, under the program guidelines the following borrowers will definitely NOT qualify:
- Investors. The program can be utilized only by borrowers who need assistance on their primary residence.
- Homeowners that can’t afford a adjusted home payment due to job loss or significant loss of income.
- Homeowners who are significantly underwater on their mortgages, more than 105% loan to value. If you owe far more on your home than it is worth, the plan is unlikely to help you. Places like
California will unlikely benefit from this loan modification program since housing prices have declined significantly in the past two years.
- Homeowners with Jumbo mortgages over $729,750
The Obama Plan:
Under the Obama Home Affordable Modification Plan, The Borrower Requirements are as follows:
The basic requirements to qualify are:
- Your loan was originated before January 1, 2009
- You are an owner-occupant and it may apply to second home depending on lender requirements
- You have an unpaid balance of less than $729,500
- Your monthly mortgage is more than 31% of your income
The Home Affordable Modification: Lender Guidelines
The programs, participating servicers would need to reduce mortgage payments of qualifying borrowers so that the borrower’s monthly mortgage obligation do not exceed 38% of their income.
The government would contribute money to bring payments down to 31% of their income. And the Government would also guarantee the loan to the lender against future loss due to foreclosure.
Servicers can choose to help borrowers achieve the 38% income requirement by reducing their interest rate and/or principal. Homeowners that have a total debt ratio of more than 55% would
need to enter a debt counseling program to qualify for a loan modification San Diego program.
The government is looking at additional programs to stimulate the economy and hopefully they will address the problem with homeowners that do not fall into the above categories. All hope is not
lost though. You can still negotiate a traditional mortgage loan modification with your lender even if you do qualify under the home affordable modification program.
