Democratic Party

In these bad economic times I see property owners searching with difficulty to seek info on the Internet to save their homes from going into foreclosure or save it out of foreclosure. The common question that most loan holders have is can the Obama foreclosure plan work for me.

Lets look over the options that loan holders have that are about to drop behind on their home mortgage or are already behind in their note. Most of the options are pretty much set in stone and you might not qualify over the simplest of options.

Aid for people looking for refinancing

This part of the Obama program specifically is for borrowers that have kept up to date their notes. Many of the homeowners in this group have been unable to reduce their home interest rates through refinancing because of sinking home prices.

Today, if you’re underwater on your note, owing more than the dwellings market value, forget about qualifying for a refinance. Also, at least 20% equity in your home is now a must, unless you have an FHA loan.

The new guidelines should help. Even note holders with debts that surpasses home value by 5% could be eligible And no prepayment penalties. To get this plan you loan must be owned by Fannie Mae or Freddie Mac.

The Obama Administration thinks that this plan will enable up to 5 million homeowners to obtain lower interest mortgages.

Who’s not going to qualify?. Homeowners whose house values have dropped severely, putting them down by more than 5% are out of luck.

Homeowners with “jumbo” loans also don’t qualify only those with “conforming’ mortgages do. To be very sure what kind of mortgage you have, you need to contact|check with your servicer or lender. But in general, until the past year, loans above $417,000 were known jumbo notes, and Fannie Mae and Freddie Mac were not allowed to buy and guarantee them at all.

All borrowers will have to prove they have sufficient income to keep up their loan payments on a timely basis, however it was not mentioned what would be sufficient proof.

Mortgage modification help for at risk borrowers

Homeowners in default or at risk of going into default may qualify for mortgage modification, which restructure the terms of loans. Any person with high combined mortgage debt compared to income or who is drowning may be eligible for a loan mod. Property owners with high levels of other debt, such as car loans, RV loans and credit card debt exceeding 55% of their incomes, may still qualify for a loan mod but they’ll be required to accept debt counseling in a HUD-certified program for an extended term.

If you qualify, your servicer or lender will reduce your monthly mortgage payments to 31% of your gross income. The payment would stay there for five years and then gradually revert back to the conforming loan rates that would be current five years from now.

Who wont get this

Those who bought homes for investment purposes, will not qualify for assistance the homes must be owner/occupied.

The Obama program will also not reward those buyers who were irresponsible in their borrowing. All applicants will be closely examined by lenders and those who acted irresponsibly by, for example, misrepresenting their incomes in no doc loan applications, would not qualify. Also, in order to protect taxpayers from excessive expenses, no loans will be modified unless it results in a net savings compared with the costs of foreclosing. Finally, rates would not be lowered below 2%.

That will disqualify many note holders who simply can’t afford any reasonable mortgage payment because of sickness, for example, or out of work. The Obama Plan will not reward folks who bought homes they knew they would never be able to afford, said Obama. “In short, this plan will not save every home.” No mortgages for amounts above conforming loan limits would be eligible.

This pretty much lets you know all the questions I have been getting asked lately about Obama’s mortgage bailout program and it’s requirements. Economic times are rough and if you find you don’t can’t get the Obama plan the best course of action is hire a foreclosure defense attorney to represent you to protect your home and assets.