After what many would call “The Housing Market Crash”, the Obama administration began to take steps to help homeowners avoid foreclosure and stay in their homes. The Home Affordable Modification Program is the government loan modification program that has gotten much attention from the press. Under the program, homeowners are able to request a home loan modification if they meet certain requirements established by the government. The government does not actually modify or take on any responsibility for any of the loans, rather the government acts as a facilitator and watchdog of loan modification practices between lenders and borrowers. For any lenders that guarantee their loans through Freddie Mac or Fannie Mae, participation in the program is mandatory. For lenders that insure elsewhere, participation is not mandatory, but highly recommended.
Any website with a name that ends in “.gov” is a government owned and operated website and can be trusted as a source of information. Websites not ending in “.gov” should be approached with caution, especially if they request money in exchange for information on a government operated program.
To qualify for a loan modification under the government loan modification program, borrowers must meet certain requirements which include: the home with a loan to be modified must be the primary residence of the borrower, the borrower must owe less than $729,750 on the loan, the borrower must have trouble paying their loan, the loan to be modified must have been issued before 1 January 2009, and the payment of the first mortgage must be at least 31% of the borrower’s current gross income. Assuming that a person meets all of those requirements and assuming that the lender is one who participates in the government loan modification program, the borrower has a very high chance of being approved for a modification.
Borrowers can request a loan modification by contacting their lender and requesting a government loan modification program application. If a borrower was told by their lender that they do not participate in the program but the name of the lender appears on the list at the site above, the borrower can call their lender back and ask to speak to a supervisor. If that doesn’t work, the borrower can contact a local real estate or foreclosure attorney for assistance dealing with the lender.
While the services of an attorney when applying for federal assistance are not necessary, they are recommended. An attorney can assist the borrower every step of the way by doing things like explaining confusing legal documents, filling out important paperwork (improperly filled out paperwork can slow the approval process), and acting as a representative for the borrower to discuss mortgage matters with lenders and government officials. Many homeowners have important personal commitments that can’t be rescheduled (like kids and jobs), so having an attorney to represent the borrower can help the borrower maintain as normal of a routine as possible, which is always helpful during a time of increased stress.