The Federal Loan Modification Program Can Help Millions
- Date: 2009-07-27 - Word Count: 383
Share This!
The recent federal loan modification program put into action by the Obama Administration has completely changed the way lenders handle modifications and borrowers who are having trouble paying their mortgage. Foreclosure has never been a situation that any lender likes to know is near - it's not just borrowers who lose money from foreclosure - but before loan modification really became an option in 2007, there was no other choice for low to middle income families.
In 2009 the economic recession met its peak and one of President Obama's first goals was to help homeowners not only buy homes, but stay in their homes as well. In March 2009 the new federal loan modification program was launched: The Home Affordable Modification Program.
A quick explanation for those who do not know about modifying a mortgage:
When a mortgage is modified, the interest rate is lowered to as low as 2 percent. Additionally, some modification programs offer a deference of the principal. After modified, the mortgage is extended over a 20 to 40 year period to accommodate the lower interest rate. Only homeowners undergoing some form of financial hardship are able to receive a modification on their mortgage.
This is an overly simplified explanation, but even when explained simply the benefits are obvious.
Prior to the federal loan modification program, lenders were pensive to give out modifications as they are a guaranteed loss of money. However; the program encourages lenders by providing incentives to those who are cooperative with their ailing borrowers.
The Obama's program has a total budget of $75 billion dollars to give to lenders across the country. A portion of the $75 billion dollars is provided to lenders only if they are approving modification applications. It is given in a few different ways, the most prominent being through $1,000 per borrower each year who successfully pays their mortgage on time each month. But, as many borrowers who are in financial hardship are not anywhere near the end of their debt troubles, the chances of the lender receiving that $1,000 for every application they approve is low.
While there are some glaring flaws in the federal loan modification program and modifying a mortgage lends little to no assistance to homeowners who have experienced a huge decline in property value, there is no denying that there are huge possibilities for the program.
In 2009 the economic recession met its peak and one of President Obama's first goals was to help homeowners not only buy homes, but stay in their homes as well. In March 2009 the new federal loan modification program was launched: The Home Affordable Modification Program.
A quick explanation for those who do not know about modifying a mortgage:
When a mortgage is modified, the interest rate is lowered to as low as 2 percent. Additionally, some modification programs offer a deference of the principal. After modified, the mortgage is extended over a 20 to 40 year period to accommodate the lower interest rate. Only homeowners undergoing some form of financial hardship are able to receive a modification on their mortgage.
This is an overly simplified explanation, but even when explained simply the benefits are obvious.
Prior to the federal loan modification program, lenders were pensive to give out modifications as they are a guaranteed loss of money. However; the program encourages lenders by providing incentives to those who are cooperative with their ailing borrowers.
The Obama's program has a total budget of $75 billion dollars to give to lenders across the country. A portion of the $75 billion dollars is provided to lenders only if they are approving modification applications. It is given in a few different ways, the most prominent being through $1,000 per borrower each year who successfully pays their mortgage on time each month. But, as many borrowers who are in financial hardship are not anywhere near the end of their debt troubles, the chances of the lender receiving that $1,000 for every application they approve is low.
While there are some glaring flaws in the federal loan modification program and modifying a mortgage lends little to no assistance to homeowners who have experienced a huge decline in property value, there is no denying that there are huge possibilities for the program.
Related Tags: loan modifications, home loan modification, mortgage modifications, federal loan modification program
For additional information and useful resources for home loan modifications visit the #1 loans modification spot on the net: HomeLoanModifications101.com Your Article Search Directory : Find in Articles
Recent articles in this category:
- Understand The Fha Guidelines Before Considering Fha Mortgage
The U.S. economy was hit hard by the global financial meltdown. In the housing sector, the crisis is - Basic Facts About Multifamily Apartment Construction Loans
When you make an investment, you surely think of getting something out of it to make the deal profit - Commercial Mortgage Refinance Loan - Ideal Solution For Financial Problems
Financial security is something which we have to plan from before. In life, there is no certainty wh - Free Government Grant Money Eligibility Requirements
All of us hear about free government grant money. But what is involved in obtaining this money? What - Top 10 Tips On Buy To Let Mortgages And Property Hunting
If you are looking for an opportunity to invest your savings or any money you have come into, there - A Few Tips On How To Stop Foreclosure
In case you are facing certain financial catastrophe caused by a loss or relocation of a job, or wha - How To Stop Foreclosure And Lose Your Residence To The Bank
In today's market, there are more and more citizens that get big loans then they use their home as a - Most Excellent Way To Stop Foreclosure - The #1 Blueprint For Saving Your Home
Just what is the best measure to stop foreclosure? No doubt you are browsing for an answer to that q - Act Fast To Stop Foreclosure
If you would like to find out how you can put a stop to foreclosure, there is not much to accomplish - Tips For Buying A Home With No Money
There is a popular belief that you can only buy a home if you have great credit. This is false becau
Most viewed articles in this category:
- Mortgage Refinancing - Rate Caps Protect You When Refinancing With an Adjustable Rate Mortgage
Adjustable Rate Mortgages can save you money when mortgage refinancing if you fully understand how t - 100% Mortgage Loans: What You Need to Know
Coming up with a 20% down payment can be a difficult task for many potential homebuyers. If you are - Home Equity Loan Pitfalls
The home equity loan came of age in 1996 when changes in the tax law eliminated deductions for the i - Mortgage Refinancing: How the Fannie Mae Weekly Yield can Help You Comparison Shop
Mortgage refinancing without knowing Fannie Mae's weekly yield is like buying a used car without kno - How to Pay Off Your Mortgage in 7 Years, Without Extra Payments
One of the most exciting new topics concerning wealth is “How to Pay Off Your Mortgage in - Mortgage Rate Comparison
Trying to get an "apples to apples" mortgage rate comparison can often be quite a hassle. Traditiona - Should I Pay Off My Mortgage Early?
Many people think that real estate debt is good debt. They think that their mortgage is their bigges - Mortgage Refinancing: Beware the Mortgage Vultures
If you are in the process of mortgage refinancing you need to be wary of overpaying for your loan. - Mortage Loans - How Much Does It Actually Cost In The End
Mortgage loans are the loans used to finance most people's first home. It is the big loan that ever - Where To Locate Home Improvement Loan Companies
Where to locate home improvement companies is a question that arises from many different people. Som