Loan Modifications for Mortgages is a big step to embark upon. For the majority of homeowners that qualify it can be very beneficial but there are a few setbacks as well.

Proof Of Eligibility

There are very few real disadvantages of this new program. It was created to provide help not hindrance. A minor setback is the fact that you will have to provide proof that you even qualify for this new modification process. One of the things that they will look at is your debt to income ratio. Simply, how much do you owe out and how much do you have coming in? The homeowner will have to fill out the new Home Affordable Modification Program Hardship Affidavit (form 1021) found at https://www.efanniemae.com/sf/formsdocs/forms/pdf/servicingtrans/1021.pdf. The information that you provide for proof of income cannot be more than 90 days old. In addition, your lender must be participating in the servicing of this program. The homeowner will have to be behind in their payments or appear to be heading towards default in the near future. If the homeowner is in foreclosure, than they qualify as well.

The Advantages Of This Mortgage Loan Modification Program

1. The homeowner may receive a decrease in their interest rate.
2. Good probability that rate will change to a fixed rate instead of a variable.
3. The term of the loan can be extended to accommodate a longer payment period.
4. If it is decided that the current balance is higher than the current value of the home then the balance can potentially be adjusted.
5. By taking all of the above into consideration the homeowner could come out with reduced payments depending upon their financial situation.
6. Homeowner can get up to 5000 dollars knocked off the principal if they keep the loan up to date for a 5-year period.

A Few Disadvantages

1. As mentioned earlier, the homeowner does have to jump through a few rings and provide proof of their financial situation to gain eligibility.
2. The process of getting the Mortgage Loan Modification can take up to 45 days. If the homeowner is behind in payments they could fall further behind.

The Result

This Mortgage Modification Program was designed to keep millions of Americans living the American dream of owning their own home. The whole problem was born out of careless lending practices. This plan is supposed to cover many of the old loopholes and work for both parties involved. The federal government has invested billions of dollars into this program, supplied courtesy of the American taxpayer.

The debate in reference to the validity of this program rages on. Those American homeowners that need relief want to believe. Only time will unveil the possibility of a return on a nations investment.


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