Common Questions and Answers on Obama's Making Home Affordable Plan and Loan Modification

The U.S. government and President Obama have approved a new home loan modification plan to give hard-working homeowners options during the recent economic downturn. In the past if a homeowner could not pay his mortgage, his fate was sealed. Unless he qualified for refinancing, the only option was foreclosure. The Making Home Affordable (MHA) plan is very new so there is much to be learned about it. Below you will find the answers to some frequently asked questions about this plan.

How did the Modification Plan Begin?

Shortly after taking office, the Obama administration began to work on a loan modification program for American homeowners. The plan, a spin off of the MHA, came into effect in March after being announced in February. For qualifying homeowners, loans can be modified according to the homeowner's financial situation until 2012.

What are the Qualifications for a Modified Loan?

In order to qualify for a loan modification you must be living in the home for which you hold the mortgage. You cannot get a modification for a loan on second homes, homes you are not living in, or for investment properties. The original loan must have been negotiated before 2009 and be for less than $729,750. If you are seeking a loan modification, your gross monthly income must be verified.

How Does it Work?

Your monthly mortgage payment will be evaluated according to your monthly income to find out what percentage of your income is taken up paying your mortgage. The MHA plan states that homeowners who meet the guidelines can have their mortgage payments reduced to 31% or less of their monthly income. The new, lowered monthly payment is effective for five years.

Who is Paying for this Plan?

There are two parts to the MHA plan, two initiatives with two distinct goals, and each has its own funding. The initiative for loan modification is known as the Homeowner Stability Initiative and 75 billion dollars have been set aside for this plan. It is hoped that the Homeowner Stability Initiative will help 3 to 4 million people in the next three years.

Are there Any Limitations?

This program will not help property investors; their mortgages will not be modified. Anyone applying for a modification will be required to have a credit check done in order to determine his or her primary address. Only loans insured by Fannie Mae and Freddie Mac are eligible for this plan so you need to find out who insures your loan. You can do this by calling your organization's 800 number.

How Do People Get a Loan Modification?

You can start the process of applying for a loan modification by making an appointment with a HUD-approved financial advisor. Many of these counselors are free and will work with you to review your financial situation and find out what your options are.

For essential tips and facts about how to get approved for a Loan Modification, Visit our simple, no nonsense loan modification guide and resource: http://MortgageModificationLoan.net/