Eligibility Requirements Under Obama's Loan Modification Program

Do you have questions about Obama's loan modification program and who is eligible to participate in it? Are you wondering which financial institutions are providing loan modification options using the $75 billion allocated by the Treasury Department? Keep reading for some answers to these questions and more.

Lender participation in the federal program isn't required, but many financial institutions have already signed up and many more are eager as modifying a loan is a much preferred alternative to foreclosure. Also, under Obama's loan modification setup, lenders are being offered incentives to participate in this plan that is expected to protect four to five million American homeowners from losing their homes.

The federal loan modification program has the following requirements for eligibility:

- the loan being modified must be a first mortgage on your primary residence
- the loan being modified must represent a monthly payment > 31% of your monthly income
- the loan being modified must not be delinquent

- you must be able to provide proof of your income

In order to process your application for the federal modification program, you must provide the lender with a detailed hardship letter, a thoroughly completed application form, a detailed income statement, and proof of your debt. There is no fee associated with applying for modification under the Affordability and Stability Plan.

Not only are the lenders who agree to participate in the federal loan modification system being provided incentives, so too are homeowners. For example, if you pay your newly modified loan as required for five years, you may qualify to receive a $5,000 bonus.

Don't procrastinate applying for relief through the federal loan modification program. Avoid the rush and inevitable glut of paperwork that's going to start rolling in and get in front of your lender before the crowd.