In these tough times I see mortgage holders running around aimlessly to get information on the Internet to protect their homes from falling into foreclosure or bail it out of foreclosure. The common question that most folks have is will the Obama foreclosure program help me?

Lets explore the choices that a borrower has thats about to drop behind on the note or is already behind in the note. Most of the options will seem bleak unless you fit a criteria as listed below.

Aid for people looking for refinancing

This part of the Obama program specifically is for note holders that have kept up to date their loans. Many of the homeowners in this classification have been unable to reduce their home interest rates through refinancing because of deflating home prices.

Today, if you’re drowning on your mortgage, owing more than the houses market value, forget about qualifying for a refi. As A matter of fact, at least 20% equity in your home is now a must, unless you have a FHA loan.

The new guidelines should help. Even homeowners with debt 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 Government estimates that this plan will enable up to 5 million borrowers to receive lower interest mortgages.

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

Homeowners with “jumbo” loans also wont qualify only those with “conforming’ mortgages will. To be absolutely sure what type of mortgage you have, you need to contact|check with your mortgage servicer or lender. But in general, until the past year, loans above $417,000 were considered jumbo loans, Fannie Mae and Freddie Mac were not able to buy and guarantee them at all.

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

Mortgage modification assistance for at-risk borrowers

Property owners in default or at risk of falling into default may qualify for mortgage modification, which restructure the terms of loans. Anyone with high combined mortgage debt compared to income or who is underwater may be eligible for a loan mod. Mortgage holders 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 get this plan, your servicer or mortgage lender will drop your monthly mortgage loan payment to 31% of your gross income. The payments would stay that way for five years and then gradually revert back to the conforming loan rates in place at the time.

Who wont get this

Those who paid for homes for investment reasons, do not qualify for help the homes must be owner/occupied.

The Plan will also not aid those buyers who were irresponsible in their borrowing. All borrowers will be closely looked over by lenders and those who acted unscrupulously by, for example, misrepresenting their incomes in no-doc loan applications, would not qualify. Also, in order to protect Americans from excessive debt, no loans will be modified unless it results in a savings compared with the costs of foreclosure. Rates will not be lowered below 2% in any case.

That will disqualify many note holders who can’t afford any type of mortgage payment because of illness, for example, or job loss. The Obama Plan will not reward folks who bought homes they knew from the beginning they would never be able to afford,” said Obama. “In short, this plan will not save every home.” No modifications for amounts above conforming loan limits would be eligible at all.

This pretty much sums it up all the questions I have been getting asked lately about Obama’s mortgage bailout program and it’s requirements. Economic times are hard 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.

No related posts.

Related posts brought to you by Yet Another Related Posts Plugin.

Tags: business, credit, economy, family, finance, government, home, money, mortgage, Mortgage loans, personal finance

This entry was posted on at 10:33 am and is filed under Mortgage loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.