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Federal Mortgage Loan Modification - What is It?

By: Tiffany Nelson

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Millions of American homeowners are finding themselves facing the real possibility of foreclosure. They are in high interest loans or facing a financial crisis that makes paying their mortgage every month impossible. President Obama's home stimulus plan includes $75 million dollars, including monetary incentives for lenders to modify your mortgage loan. The federal mortgage modification program will stop foreclosures and lower monthly payments so that you can stay in your home!

Americans are struggling because of the economy but also because of bad loans. For instance, the negative amortization loan, did anyone really understand this loan? Couple the bad loans with the values of homes decreasing almost daily and homeowners are desperate to find relief. Lenders realize that the plummeting home values and increased unemployment rates will and have produced an epidemic of foreclosures. They too are eager to clear the books and start over! The Federal loan modification may be the answer.

Here are basic criteria you must meet to qualify for a federal mortgage modification loan:

The home must be your principle residence

The total loan amount must be less than $729,750

Total mortgage payment must be more than 31% of your gross income

Origination of the loan must be on or before January 1, 2009

You must be the homeowner and have a financial hardship situation

The home must be your primary residence, which means you live in it more than 50% of the time. If you have a 2-4 unit residence and you live in one of the units, there are loans modifications for you as well. The Federal modification program will work with you to get your monthly mortgage payment to or under 31%, (total monthly payment includes taxes, insurance and homeowner dues).

If you are eligible and qualify for a home mortgage modification loan, you may receive these benefits:

Reduced interest rate as low as 2%

Term of your loan extended up to 40 years

Principal reduction or possible forbearance

Delinquent loan brought current

Second mortgages could be eligible for decreased interest rate as low as 1% or the lien could be forgiven completely.

Article Source: http://depositarticles.com/

The benefits of a Federal loan modification could be the answer that saves your home! The key is to do your homework! Do the research and make sure you know what exactly you need as far as information and documentation. You only get one chance at a federal mortgage modification, if you are unprepared the first time, there will be no second chance! However, you don't have to go it alone! There are qualified loan modification specialists

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