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Home Mortgage Modification Program

Qualifications required for a mortgage modification program

There are times when home owners suffer personal setbacks in their lives and cannot continue to pay their mortgages under the same terms or on time like they used to. These setbacks may be due to an abrupt sickness, an accident, financial loss, loss of a job and so on. In such an event, a home owner may find it difficult to continue making their mortgage repayments. Luckily however, residents of the US can now take advantage of the federal mortgage modification program. This is a process where terms of the original contract between the homeowner and the lender are modified to enable borrowers adjust terms of payment that are affordable to them.

To qualify for the mortgage modification program, a mathematical calculation of the homeowner’s gross monthly income, monthly expenses, cash in the bank, current loan balance and current value of the home is first done. Using this calculation, the bank is able to determine if the homeowner’s loan can be modified using the standard formula. The other qualifying factor is that the homeowner must have a mortgage of less than $729,750 and was written before January 1, 2009. A higher amount is definitely disqualified. To qualify for the mortgage modification program, the house must be the homeowner’s primary residence. In the case where the building is a structure of four units and below, the homeowner must occupy at least one of them. The homeowner should not have been convicted of a felony in the last ten years and should show the ability to make the modified payments.

A home owner qualifies for a mortgage modification program if their expenses concerning monthly mortgage payments do not exceed 31% of their monthly gross income. This quality gives the lender the confidence that the newly adjusted mortgage payments will not be defaulted like in the first contract. A mortgage modification program is a good method of ensuring that homeowners do not have to undergo a foreclosure of their family home and lose their important investment. This program ensures that homeowners continue to own their houses and that financial institutions are not faced with high numbers of mortgage defaulters and foreclosure rates. The homeowner also gets to benefit by getting a mortgage plan that they can afford. For every month a homeowner makes a payment on time, the Treasury pays an incentive that reduces the principal balance on a loan.

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