The governement loan modification will “alter” the payments on your mortgage to a level that is no more than 31% of your debt to income ratio. What is uncertain at least to me at this point, is whether the ration that they use will include existing credit based bills such as credit cards, term loans, and car loans as well. Either way though, for millions of families, the government loan modification programs will allow them to save their homes and allow them to continue living in their houses at a much reduced mortgage payment.

One other HUGE benefit to the government loan modification will be the finacial incentives that are being offered to homeowners. The government will give people that enroll in the government loan modification program up to $1,000 per year up to five years as long as they abide by the terms of the modification. This money will be applied directly to the principal amount of the mortage. So, not only are you able to get a lower monthly payment, but you very well could reduce the principal amount of your loan by up to $5,000 for simply paying your loan payment on time.

Something else to keep in mind for those that are thinking about taking advantage of the government loan modification program is that it is going to be not only easy to apply for, but it will be easy to be accepted. The government and the lenders alike know that the economy in a large part hinges on finding a way for people to stay in their homes and to slow the currect rate of foreclosures. The only way that this is possible is to exist existing mortgages, due to the way that they were set up in the first place. The modified mortgages will all be fixed rate and will be affordable according to your income.

If you are in a situation where you could lose your home, the government loan modification could likely be just what you need. Many feel as though their situation is beyond repair. However, the government loan modification programs are designed to give you a fresh start, almost like a do-over. So, if you are in a situation where you might lose your home, take advantage of a government loan modification to put yourself in a situation where you can not only save your home, but also preserve the credit rating that you have worked so hard to get.

Over the past couple of months, The Department of Treasury and President Obama have put some pressure on the banks to accept loan modification requests from consumers. As a matter of fact, they have gone as far as to offer them financial incentives to help homeowners in stopping foreclosure. The way this is done is by the consumer taking advantage of the loan modification plan laid out by Obama. This is also referred to as a loan modification program.

For the most part, these modification programs reduce your monthly payment to an amount that is affordable. This is done largely by your debt to income ration. The lenders will take your gross monthly income and then modify your payment so that it is no more than 31% of your gross monthly income. Typically, when banks approve you for a mortgage, they will allow you to have a payment of up to 42% or your salary or a 42% debt to income ratio.

Fortunately, the government is smart enough to see that a majority of the people seeking a way of stopping foreclosure are doing so because they were essentially preyed upon by lenders. The lenders in an attempt to get people approved for mortgages were pushing adjustable rates hard as a way of showing potential homeowners a very low initial payment. What people did not expect was for their payments to rise so drastically in the years to come as the lenders used their option to raise the interest rates on the homeowners. This in many cases, raised the montly mortgage to a level that was and is unmanageable.

If you are looking for a solution to stopping forclosre, it is higly adviseable that you take advantag of the loan modificatin programs that are available.

People need to find a way to stop foreclosure not because they are living outside of their finances, but because they are losing their jobs, their investments are disappearing in the stock market, Their credit lines are being reduced, and money in general is being lost daily at no fault of our own.

One of the surest ways to stop foreclosure today is to look into a loan modification program. Since information about the loan modification plan started being released to the public back in early March, more and more people have been taking advantage of it. The government has interjected itself and has actually given the lenders financial incentives for helping you stop foreclosure.

In a nutshell, the lenders are eligible to actually receive money from the Department of Treasure for every person that enrolls in a loan modification program to stop foreclosure. As long as the homeowner stars in the program and keeps their mortgage current, the lender is eligible to receive a cash payment of up to $1,000 a year for up to 3 years. With the number of people that need to stop foreclosure, the loan modification program is a no-brainer for the lenders and consumers as well.

Some of you, in the past may have tried to work with your lender to stop foreclosure,  and reduce your interest rate, or to modify your loan in some way and were met with resistance. This is not the case anymore. The banks themselves know that they can’t afford to foreclose on you anymore than you can afford it. So, while in the past, banks have not always been the easiest organizations to deal with, it is no possible with a little bit of help to not only stop foreclosure but to get your payment modified to a level that you are comfortable in paying it.

1. It’s about cost not value – One of the biggest reasons for coming up with a loan modification plan at all is because the Obama administration believes that if they can reduce the monthly payment to an amount that the homeowner can afford that they will stay in the home even as the home value falls. In my opinion, this is sound thinking. I can’t see many people walking away from their home because the value is plummeting. I can’t see anyone walking away from their home voluntarily for any reason. As long as the loan modification plan reduces the monthly payment to a point where people can afford it and still live comfortably, they will wait until the value of the home rises before trying to unload it. There are some people that believe that people will abandon their homes – loan modification plan or not simply because their home is no longer worth what it was when they bought it. My question is, abandon their home and go where? To rent an apartment? Homeowners are smart enough to know that the real estate market goes up and down. They are also smart enough to know that as long as they can afford to pay for the place that they call home then they will make the payment. Nobody wants to be homeless or have a forclosure on their credit report. The loan modification plan will likely help millions of people remain in their homes.

2. Debt To Income Ration – The way that the loan modification plan is going to work is actually very sound. The loans that are modified will be done so in a way that the persons Gross salary as well as current bills will be taken into consideration. The loan modification plan calls for the lender themselves to modify the mortgage payment to be no more than 38% of someones debt to income ratio. The Treasury will then step in and help the lender further reduce that payment to be no more than 31% of the homeowners debt to income ratio. You can figure your own ration by simply taking your Gross salary. Once you have done that multiply it by 31% and then you have roughly what your mortgage payment would be. It is unclear at this time whether or not they will take your other credit related bills into consideration when figuring out what your actual payment will be under the loan modification plan.

3. You can’t lose – Let’s face it, if you are looking for information on the loan modification plan it is more than likely because you are afraid you are going to lose your home. For some people, a loan modification plan is “below them”, but what they don’t understand is that everyone is “hurting” right now. People that have been able to maintain a credit score of 800+ for their entire lives are taking advantage of the loan modification plan because it will help them maintain their credit rating. People are being laid off left and right, creditors are reducing our credit lines on things like credit cards and even open lines of credit, and our financial future is uncertain. Getting more information on the loan modification plan makes you responsible not some sort of welfare case. Do what is smart and take advantage of the loan modification program while it is still available.

As you can see, the loan modification plan is really a no-brainer for those that are either currently in financial trouble with their mortgage or for people that can see the trouble coming. The lenders themselves actually welcome the idea of loan modification if you qualify because it helps keep their books clean, more importantly it allows them to keep people in their homes rather than foreclosing. Believe it or not, the bank would much rather have you in the home and paying a payment that is affordable than taking the home from you and letting it sit vacant.

We will update this page with more information on the loan modification plan as it becomes available.

Recently, there has been more than a little bit of talk about the new loan modification program and what the ins and outs of it are going to be. Everyone has been waiting to hear exactly what the Department of Treasure would say on the subject and exactly how enrolling in a loan modification would beneifit not only the homeowner but also the lenders or mortgage servicers. This blog entry will go over some of the biggest benefits of being in a loan modification and why getting involved as soon as possible is to your benefit.

As of March 4, 2009 the Department of Treasury has announced new and updated information regarding how a loan modification works and how one can qualify for a loan modification program.

Following you will find information that will be useful to anyone that is interested in using a loan modification program to prevent foreclosure or to make their house payments more affordable.

Monthly Payment Reduction

The Department of Treasury will partner with qualified and acceptable financial and lending institutions in an effort to reduce a homeowners monthly housing payments. In order for this to work, the responsible lender will have to first take the steps to reduce the Debt To Income Ratio to a percentage not to be larger than 38%. This ration can be as low as 31% in which cases the treasure will match dollar for dollar with the lender or investor. Basically, this means that your mortgage payment will be lowered in accordance to the amount of money you make and your outstanding or out-going monthly expenses. If you enroll in a loan modification program, you should be prepared to discuss and prove exactly how much money you make as well as all of your “credit based” expenses. These include car loans, credit card bills, personal loans, term loans, and any other expenditure that is “credit based”. The current loan modification program guidelines definitely weigh heavily in favor of the consumer or home owner.

Loan Modification Program Incentives

Both the servicer or lender and consumer are eligible to receive “incentives” for their participation in a loan modification program. Basically, the Department of Treasury is willing to reward both the banks and homeowners for holding up to their end of the agreement when a loan modification program is in effect. The Lender or investor is eligible to receive up to $1,000 per year per modification as long as the consumer remains enrolled and current. The homeowner is eligible to receive up to $1,000 per year which is paid directly to the principle of their home loan as long as they abide by the terms and conditions of the loan modification program that they are enrolled in.

The two benefits listed above are not even a fraction of the great things that are possible when you enroll in and participate in a loan modification program. Lets face it, for years not only the government, but the banks and homeowners saw this day coming. Now that it is here, there is no shame in enrolling in a loan modification program, especially if you are at risk of losing your home.

In future installments on this blog, we will talk about the best ways to get started with a loan modification program and what kind of information you should have at your fingertips to get the ball rolling. What I can tell you right now is that the time and conditions are right for any responsible home owner to get into a loan modification program if they feel that they are currently or could in the future be at risk of losing their home. Being responsible means knowing when you can no longer handle the situation on your own and asking for help. Presently, loan modifications are being offered because some banks did not operate in “good faith” and wrote mortgages in a way and with terms that bordered on criminal. So, my advice would be to take advantage of a loan modification program while they are stil readily available and generally accepted by the public at large.