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Wells Fargo Signs Home Affordable Second-Lien Modification Program...Federal Loan Modification Program
When people refer to the federal loan modification program, they are most likely referring to President Barack Obama’s Making Home Affordable Program. The purpose of the plan is to either refinance the mortgage or modify the loan terms as a way to assist homeowners in their monthly payments and/or prevent foreclosures.
It has been estimated that approximately five million homeowners will benefit from this program. But lately more and more reports and complaints here on LoanSafe.org tell another tale. Because the plan is voluntary for mortgage servicers, it is proving to provide little relief for homeowners who are trying to get help under the program.
The Making Home Affordable plan is focused on the belief that the homeowners will remain in their homes because it is not the declining prices of their homes that is the problem but the difficulty in coming up with the monthly payments. Based on this philosophy, the federal government has asked loan servicers to decrease the monthly payments to a value that will not exceed 38 percent of their gross monthly income. The government will assist further by shouldering seven percent so that the homeowner will only need to pay an amount that is not more 31 percent of his gross income.
To be able to meet these values, the loan servicer is supposed to start by dropping the interest rate to a value that could be as low as two percent. If this would prove to be insufficient, the servicer will lengthen the loan payment period by as long as 40 years. The loan servicer may also forebear the loan principal without charging any interest.
To motivate loan servicers, they will be given $1,000 by the government for every loan modification that they approve. This will not stop there because they will continue to receive $1,000 every year, up to a maximum of three years, if the borrower is able to continue with the payments.
However, only primary residences that are occupied by the owner and which have principal balances not exceeding $729,750 will be able to benefit from this loan modification program. Also, homeowners will have to present some documents to prove that they are suffering from serious financial hardships that have resulted in their failure to make the payments.
Please join our community at www.LoanSafe.org/forumand tell us your story or come get help from the other 17,000 homeowner members who are fighting to save their homes just like you.
About Moe Bedard
I am the founder of LoanSafe.org, LoanWorkout.org and CEO of MoeSeo Inc. My work has been featured in the New York Times, LA Times, Fox Business and many other media publications. My goal is to help people with my websites and restore hope through the internet. I was born and raised in Southern California and currently reside in Temecula, California with my wife and five children.
Hi Moe,
I just joined the forum and learned a lot, read it everyday. thank you for setting up all this, big help for us out there.
I have question, usually people believe bank won’t prefer to foreclose houses due to the home equity and future sale price may not even cover the loan balance along with unpaid interest and legal expenses. My problem is I do have hardship and I also have equity on my house which I believe enough to cover the fees if bank do a foreclosure on me.
My loan is Fannie Mae loan, and I am in foreclosure process. Can you please tell me lenders do foreclosure on gov backed loan too? Can they do that? I already resubmit my package and waiting to be reviewed again, I truly hope they can approve me. I have always live within my means, saved enough money to put down a huge down payment, now this equity that I have saved just came back to hunt me, what a world!
My 1st with citi @2467.00 + tax and insurance at $3166 total. My gross is $7800. so is 40%. With my 420k loan @ 2% is 1480 , if using 31% of my gross, then the payment should be $2148 , deduct tax and insurance, I still have 1718 to pay citi. Why are they just rejected me and rather foreclosure my house? Even with equity, but today’s market is bad for selling a house, why the banks do that, really doesn’t make sense to me.
I have question, usually people believe bank won’t prefer to foreclose houses due to the home equity and future sale price may not even cover the loan balance along with unpaid interest and legal expenses. My problem is I do have hardship and I also have equity on my house which I believe enough to cover the fees if bank do a foreclosure on me.
My loan is Fannie Mae loan, and I am in foreclosure process. Can you please tell me lenders do foreclosure on gov backed loan too? Can they do that? I already resubmit my package and waiting to be reviewed again, I truly hope they can approve me. I have always live within my means, saved enough money to put down a huge down payment, now this equity that I have saved just came back to hunt me, what a world!
My 1st with citi @2467.00 + tax and insurance at $3166 total. My gross is $7800. so is 40%. With my 420k loan @ 2% is 1480 , if using 31% of my gross, then the payment should be $2148 , deduct tax and insurance, I still have 1718 to pay citi. Why are they just rejected me and rather foreclosure my house? Even with equity, but today’s market is bad for selling a house, why the banks do that, really doesn’t make sense to me.