The loan modification help provided by the loan modification program has been successful in helping millions of people get rid of debt and save their homes in the process. It is a very effective method of paying off the mortgage loan and securing oneself for the future.
The home loan modification program introduced by the Obama administration was aimed to help distressed home owners from losing their homes. This situation was a consequence of the global financial crisis which affected one and all and led to the burden of debt on almost every individual. To get out of debt many companies introduced debt relief programs to help the millions of people not knowing how to get rid of the debt problem. Out of that loan modification program was the most popular as because of this program people were able to modify their first mortgage loan and reduce the monthly amount they need to pay off to resolve debt issues.
The US President Barack Obama was the initiator of the loan modification program and hence it is also known as The Obama’s loan modification plan. The Obama’s loan modification plan was established to provide loan modification help to millions of people who were on the verge of foreclosure and didn’t have enough cash to save their home. Home loan modification enables them to contact lenders and modify the mortgage loan structure so that it becomes affordable for the debt struck people. The Obama’s loan modification plan allowed restructuring almost 4 million bad mortgages but to qualify for the plan and get the required loan modification help debtors would have to follow a few simple steps to ensure everything is on track.
• The loan modification program lets people decide whether they want to stay in their homes even if the value of their homes declines in future. Loan modification enables the debtors to pay off their debts gradually and save their home irrespective of the equity in their homes.
• The home loan modification program will bound the lenders to reduce the total monthly payment of the debtor to 31% of their gross monthly income. This will lead to a stop in the increasing amount of debt on a monthly basis because of inability to pay off the extra amount over and above ones monthly income. The interest rate would also be reduced to as low as 2% under the loan modification program. However, if the reduction of interest rate to 2% also does not lead to the total debt being reduced to 31% of the total monthly income then the term period of repayment will be extended to a maximum of 40 years.
• The Federal Government decided to offer incentives amounting to $ 1000 to lenders for offering loan modification help to their clients and if the borrower makes on time payment of the modified loan for a year then the Government has arranged for an annual incentive of $1000 for the borrower for up to 5 years. However, both the lender and borrower need to be extremely diligent in paying off the loan modification amount on time in the beginning 3 months to be eligible for this incentive.
• The Obama’s loan modification plan was introduced to help the average citizens and not the rich segment of society and to qualify for the loan modification program one has to acquire the first mortgage loan on his primary residence and have an outstanding balance of over $730,000.
