With the countries foreclosure crisis worsening, the Obama administration has been forced to create a new plan for the recovery of the housing market. As published in the Arizona Republic, officials from the Obama administration released  plans for a new homeowner assistance program call the Home Affordable Modification Program.

Within the plan there are three major factors: aid for homeowners who are unemployed, principal balance reduction for homeowners with unaffordable mortgage payments and required help with refinancing distressed borrowers from mortgage companies.

For homeowners who have recently become unemployed,  the Home Affordable Modification Program offers assistance by asking mortgage companies to reduce borrowers payment until the borrower can find work.  The reduction  amount would be the added into the principal balance of the loan and be required to be repaid.

Additionally, the program will offer aid to home-owners who owe more on their balance than their home is worth. The government would offer incentives for mortgage companies to reduce homeowners mortgage balances by up to 15% of the current market value of their home. The new, refinanced loan would be backed by the  federal government.

With past homeowner assistance programs, the Obama administration has not offered many incentives to the mortgage companies for their aid in refinancing borrowers, with the new plan, theses companies with receive up twice as much money as an incentive for refinancing homeowners.

Although the Home Affordable Modification Program aims to help many homeowners. There is still strict qualifying criteria. According to the Arizona Republic,

Strict qualifying criteria, which include demonstrable financial hardship without a single missed mortgage payment, have limited the success of the program.

Of the roughly 1.1 million homeowners who have applied, only 170,000 have received modified loans. Just half of those borrowers are expected to keep their homes.

Despite the fact that the requirements to qualify are difficult, this new program will still help to stabilize the current housing market by decreasing the amount of foreclosures seen.  With future modification to the Home Affordable Modification Program, even more homeowners will be able to qualify and benefit from federal assistance.

Obama Administration Discloses New Homeowner Assistance Program is a post from: mesa-az-mortgage.com

What is happening in the world today-what is happening with loan modifications?  A recent post about Mesa AZ Loan Modifications-Are They Working? revealed a realtor’s insights and opinions but what is this loan modification and who can get one?  After much study and research on this topic, I have found several things and want to share a couple.

First, in order to qualify for a modification you need to 1. have originated the loan before January 2009.  2. have a mortgage payment that exceeds 31% of your income.  3.  must be your primary residence.  4. must report having difficulty making your monthly mortgage payments.  These are only 4 of the preliminary qualifications.

Originated a loan prior to January 2009-the housing market didn’t just take a turn yesterday.  With this qualification, they can more seriously focus on those that purchased homes during the housing market boom-when prices and values increased dramatically over a very short period of time, to fall back down again and create some strenuous financial problems. 

A mortgage payment that exceeds 31% of your income-this type of help, the loan modification, is intended to help those that are currently struggling due to an increase rate or payment or possible decrease in income.

Primary Residence- The push is to keep people in their homes.  Currently they are not focusing on second homes or rental properties as those are not as detrimental to industry as one’s place of residence.

Difficulty making payments- it is intended to help those whose house payments exceed 31% of their income.  It is not intended for people who can comfortably make payments.

Second,  there is a significant problem with the conversion rate.  What I mean is that the number of people applying for loan modifications far exceeds those that are in the permanent phase.    The government is aware of problems such as the conversion rate AND the problem with paperwork.  Apparently, loans get stuck in a process of paperwork.  There are many details that cannot be forgotten and sometimes borrowers that need to present more paperwork get lost in the shuffle.  The US Dept of Treasury recently released this statement, “Increasing the number of borrowers receiving permanent modifications under HAMP is critical to our efforts to preserve affordable and sustainable homeownership,” said HUD Senior Advisor for Housing Finance William Apgar. “While we continue to meet our goals to provide immediate assistance, the updates announced today should enable servicers to transition borrowers more quickly and easily from trial to permanent modification.”

If you are one who has heard your neighbors talking about their Mesa AZ mortgage loan modification, or heard information in the news and you are thinking more seriouslyabout it, consider the pre-qualifications. This may be your opportunity.  Is your loan older than January 2009?  Is it your primary residence?   Does your payment exceed 31% of your income?  Are you struggling to make your monthly mortgage payment?  The great news about  HAMP (Home Affordable Modification Program) is that they WANT to get more of the applications moved into permanent status!  The efforts are there, to get more loans modified and create a more stable economy.

Photo: © Lisa Heuer Photography

Mesa AZ Loan Modifications is a post from: mesa-az-mortgage.com

People who bought a house in Mesa, AZ in 2006 currently owe more than their home is worth. Because of the downturn in the economy, people who currently owe more than their home is worth have a doubly-difficult decision to make: what to do regarding a loan modification, short sale or foreclosure.

Local Realtor Kristin LaVanway gives some commentary on whether or not loan modifications are working.

Mesa AZ Loan Modifications: Are They Working? is a post from: mesa-az-mortgage.com