In March 2009, President Obama passed the Making Home Affordable plan to help struggling home owners to get a loan modification into a new, more affordable, monthly home loan payment.

What is a loan modification?

A loan modification is a process where the terms of a mortgage are modified outsied the original terms of the contract agreed to by the lender and borrower (i.e. mortgageor and mortgagee). In general, any loan can be modified.

In the normal progression of a mortgage, payments of interest and principal are made until the mortgage is paid in full (or paid-off). Typically, until the mortgage is paid, the lender holds a lien on the property and if the borrower sells the property before the mortgage is paid-off, the unpaid balance of the mortgage is remitted to the lender to release the lien. Generally speaking, any change to the mortgage terms is a modification. As the term is used today, it refers to a change in terms based on either the specific inability of the borrower to remain current on payments, or new government mandates to lenders to make mortgage more affordable.

Types of Modifications

Mortgages are modified to the benefit of the borrower in one or more of the following ways:

• Reduction in interest rate, a change from a floating to a fixed rate, or a change in how the floating rate is computed
• Reduction in principal
• Reduction in late fees or other penalties
• Lengthening of the loan term
• Capping the monthly payment to a percentage of household income

The borrower can be current, late, in default, in bankruptcy, or in foreclosure at the time the application for modification is made. The programs available will vary accordingly.

There may be modifications made at the discretion of the lender. The lender is motivated to offer better terms to the borrower because of the expectation that the borrower might be able to afford a lower payment, and that a performing loan (i.e. one in which payments are current) will be more valuable ultimately than the proceeds obtained from a foreclosure sale.

The state and federal government may structure a mortgage modification program as voluntary on the part of the lender, but may provide incentives for the lender to participate. A mandatory mortgage modification program requires the lender to modify mortgages meeting the criteria with respect to the borrower, the property, and the loan payment history.

How it works!

This mortgage bailout plan is a $75 billion plan which will allow homeowners the chance to stay in their home, as opposed to being forced to sell, foreclosed on, or defaulting on the mortgage. Here is how it works:

- Homeowners facing "Financial Hardships" can get a home loan modification easier than ever before thanks to Obama's "Making Home Affordable" plan. These hardships can include, loss of job, hospital bills, reduced wages, a higher mortgage payment, and basically any financial issue which is out of the homeowners control

- The home loan must have been closed off and signed on before January 1st 2009.

- Homeowners who wish to use this plan can not have declared bankruptcy in the past. Homeowners will get only one chance to save their finances with Obama's "Making Home Affordable" plan.

- The value of the mortgage must be less than $729,500.

- Homeowners who are paying more than 31% of their gross monthly income would see a big savings through home loan modification. The plan calls for lenders and banks to modify home loans into a new monthly payment which will not exceed 31% of a homeowners gross monthly income.

Overall, Obamas home loan modification plan will help millions of homeowners get into a more affordable mortgage. This will enable them to keep their homes, and start paying down their other debts. Homeowners should look into the possibilities of getting a mortgage modification with Obamas bailout plan, and see how much money they could be saving every month.

To get qualified for a loan modification contact Mike Stein at Foreclosure Shield USA right away for a free consultantion.

602-997-1720