Dispelling the Myths Around Obama's Making Home Affordable Loan Plan For Modifying Mortgage Loans |
Published : 2009-08-30 12:57:41 Popularity : 
Views : 4315 Word: 524 | |
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Banks have long had a process by which mortgage holders facing financial difficulty could apply for a loan modification wherein the length of the term of the loan was increased or interest rates were decreased. Because of the difficult times we're now facing in this economy, this topic has become more mainstream and there are some mis-perceptions and rumors out there about loan modification programs.
Under the Homeowner Stability Act, a fund of $75 billion was created for loan modifications between March 2009 and December 2012. A process has been established for banks to follow when processing requests for loan modifications under President Obama's Making Home Affordable (MHA) plan.
The MHA plan is intended to be a win-win situation for both lenders and homeowners alike. Banks that voluntarily choose to participation in the program are paid incentives for approvals and keeping a mortgage holder in a loan program is a much better alternative to foreclosure. Loan modification helps homeowners by allowing them to stay in their homes.
One of the false items that is being circulated about the Making Homes Affordable plan is that all lenders have to participate. The truth is that participation by lenders in the loan modification program is voluntary. The only restrictions are that the banks follow the guidelines set out by the government for qualifying and approving applicants. No lender is required to take part in the plan.
Foreclosure is an unproductive, lengthy, and expensive process that banks dread even more than delinquent mortgage holders. Those lenders who have chosen to participate in the MHA plan have decided that a modified loan is a better deal than no loan at all and they are also provided with incentives for modified loans.
Some citizens were concerned that the Making Home Affordable plan would benefit house flippers and real estate investors rather than the actual homeowners. This is not true because the requirements under the MHA plan include a provision that the loan is only for a first mortgage on a home that is the mortgage holder's primary residence.
There's always a learning curve when a new plan is introduced and myths will permeate until people research and learn more of the facts surrounding the plan.
You could revise your mortgage terms in order to lower your monthly payment through Obama's new loan modification program. Check out the facts before deciding not to pursue a loan modification to assist you in your time of financial hardship. |
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