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The Obama administration has a revamped version of the Making Home Affordable (MHA) mortgage aid program. Critics pointed out that as many people are falling out of the program as those that are benefiting from it.
In an effort to improve the performance of the Making Home Affordable Plan the new version will focus on helping homeowners qualify for permanent loan modifications. To qualify for a permanent loan modification homeowners must pay their mortgage payments on time for three months.
The new plan aims to help in three ways: 1) by giving unemployed homeowners a three to six month break on their mortgage payments, 2) by increasing the incentives for banks that fast track loan modifications and avoid foreclosures, and 3) by allowing lenders to offer FHA backed loans to borrowers.
These new features will soon be available. So, if you thought you did not qualify for the MHA program, you might qualify soon. The first step you should take is contact a free housing counselor that can help your prepare the paperwork you will need to qualify for a loan modification.
For instance, if you are unemployed, your mortgage is worth less than $729,750, you live in your home and you are receiving unemployment benefits, you can apply for a three to six month loan modification which will reduce you mortgage payments to 31 percent of your monthly income.
The FHA, the Federal Housing Administration, is receiving $14 billion to fund thier role in the new program. The FHA will insure many of the new loans used to refinance mortgages in risk of foreclosure. FHA loans are less stringent than commercial, and typically have lower interest rates.
The catch for lenders is they must reduce the mortgage balance of applicants by 10 percent to qualify incentives and benefit from the insurance of the FHA.
To qualify you must write to your lender and ask for a loan modification through the Making Home Affordable Plan. They will provide you with a list of forms and documents you must fill in, collect and send back to your bank. These documents will include proof of income, proof of residence in the mortgaged home, and a detailed budget of your monthly expenses.
The revamped program may or may not improve the performance of the MHA program, but bare in mind that this program has already helped over two hundred thousand homeowners lower their monthly mortgage payments by $500. The MHA is far from a total solution for the U.S. Real Estate crisis but it might just be enough to help you save your home from foreclosure.
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