The financial condition of people in the U.S. is under tremendous pressure mainly because of the recession. It has not only lowered the economy of the country, but has left most of the citizens jobless as well as homeless.
As a result folks are falling behind on their mortgage payments resulting in home foreclosure. People who are not able to pay their debts are on the brink of losing their homes. To overcome this problem, President Barack Obama has come up with a loan modification program.
The loan modification plan works by reducing homeowners mortgage payments and providing the homeowners the opportunity to reduce excessive late fees and balance accrual.
How it Functions?
1. Interest rates and cap:
The loans that will undergo modification will be allotted a significantly reduced interest rate. The modified interest rates can fall between 2-6% depending on the customers hardship and ability to prove financial difficulty due to their mortgage.
2. Loan principal reduction:
Principal reduction is used to lower the balance thus resulting in lower payments. The loan modification reduction is based on current market value and is not guaranteed by the Obama plan. Each case is unique based on hardship.
3. Reduced monthly payments.
Your lender will help to assist in reducing the monthly payments.
Obama's loan modification plan will lower the homeowners payment to 38% of their monthly payment.
4. Lenders incentive to modify:
Potential lenders will receive $1000 in incentives to qualify homeowners for the loan modification plan.
In addition, the homeowner will receive $1000 of principal reduction for the next 5 years as long as they make their payments on time.
5. Payments for successful performance of debtors:
A homeowner can highly benefit from the loan modification plan by successfully meeting the required guidelines of paying the installments. This automatically decreases the principal amount of the loan that the debtor has borrowed. This is an added benefit of this loan modification plan.
It is imperative the homeowner understands the loan modification plan and keeps all paperwork of approval.
Obama's plan for loan modification has been welcomed by homeowners who are facing difficulties to repay their loans and is proving to be a hit amongst homeowners, who are on the verge of home foreclosures.
As a result folks are falling behind on their mortgage payments resulting in home foreclosure. People who are not able to pay their debts are on the brink of losing their homes. To overcome this problem, President Barack Obama has come up with a loan modification program.
The loan modification plan works by reducing homeowners mortgage payments and providing the homeowners the opportunity to reduce excessive late fees and balance accrual.
How it Functions?
1. Interest rates and cap:
The loans that will undergo modification will be allotted a significantly reduced interest rate. The modified interest rates can fall between 2-6% depending on the customers hardship and ability to prove financial difficulty due to their mortgage.
2. Loan principal reduction:
Principal reduction is used to lower the balance thus resulting in lower payments. The loan modification reduction is based on current market value and is not guaranteed by the Obama plan. Each case is unique based on hardship.
3. Reduced monthly payments.
Your lender will help to assist in reducing the monthly payments.
Obama's loan modification plan will lower the homeowners payment to 38% of their monthly payment.
4. Lenders incentive to modify:
Potential lenders will receive $1000 in incentives to qualify homeowners for the loan modification plan.
In addition, the homeowner will receive $1000 of principal reduction for the next 5 years as long as they make their payments on time.
5. Payments for successful performance of debtors:
A homeowner can highly benefit from the loan modification plan by successfully meeting the required guidelines of paying the installments. This automatically decreases the principal amount of the loan that the debtor has borrowed. This is an added benefit of this loan modification plan.
It is imperative the homeowner understands the loan modification plan and keeps all paperwork of approval.
Obama's plan for loan modification has been welcomed by homeowners who are facing difficulties to repay their loans and is proving to be a hit amongst homeowners, who are on the verge of home foreclosures.
About the Author:
Anthony Flores is highly recognized in the field of loan modification processing and loan modification processing questions.Visit our site to see if you qualify for loan modification today!
