Kamis, 11 Februari 2010

Obama’s Loan Modification Plan

Obama’s Loan Modification Plan – 7 Things you MUST Know about the loan modification process.

President Obama has announced the US $ 75 Billion package to save the housing market in the United States. He has allocated US $ 75 Billion to protect the troubled mortgage loans in the United States. And this is a great opportunity for the mortgage owners.

You can now modify your mortgage loans with the bank and save your home or investment property from going for the foreclosure.

Here are the 7 things that you must know about the loan modification process.

1. Payments, not prices: The plan centers on the belief that struggling borrowers will stay in their homes—even as values decline sharply—as long as they can make their monthly payments.

2. Thirty-one percent: To that end, the administration's plan requires participating loan servicers to reduce monthly payments to no more than 38 percent of the borrower's gross monthly income. The government would then chip in to bring payments down further, to no more than 31 percent of the borrower's monthly income.

3. Cash incentives: To encourage participation, servicers will be paid $1,000 for each modification and will get an additional $1,000 payout each year for as many as three years, as long as the borrower continues making payments.

4. Financial hardship: The Obama administration is pitching its plan as an effort to help responsible homeowners ensnared in the historic housing slump and painful recession—not speculators. As such, only owner-occupied, primary residences with outstanding principal balances of up to $729,750 are eligible.

5. Net present value: To determine if a particular mortgage will be modified, the servicer will perform a so-called net present value test. The test compares the expected cash flow that the loan would generate if it is modified with the expected cash flow it would generate if it isn't. If the modified loan is expected to produce more cash flow for the mortgage holder, the servicer is to restructure the loan.

6. Second liens: The Obama plan also addresses the issue of second liens—such as home equity loans or home equity lines of credit—by offering incentives to extinguish them.

7. Will it work? Moody argues that while the plan may reduce foreclosures for primary residences, it could lead to a spike in defaults for another group of homeowners.

If you want to know more about how to get approved for the loan modification than simply download the 60-Minute Loan Modification Workbook. This workbook has all the detailed information about the loan modification process. once you will download this workbook, you can simply follow the step by step guide and do the loan modification by yourself.

Please don’t wait anymore. Simply grab your pie from those US $ 75 Billion Bailout.

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