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The Obama administration's housing stabilization plan is underway and starting to have an impact. As of last week, Chase had modified 15,000 home loans. Mortgage companies are helpful and eager to help you stay in your home.
You can be among the first wave of homeowners to have their mortgages modified under President Obama's foreclosure-prevention program. As of last week, for example, Chase Mortgage, the servicing side of JP Morgan Chase had issued more than 15,000 modifications under the plan. Bank of America, which began reaching out to at-risk borrowers in early April, has sent out 100,000 letters to borrowers who could potentially benefit. It has issued some modifications, although it's not releasing data on just how many.
When the plan went into effect on March 4, 2009 President Obama predicted it could help as many as 4 million people stay in their homes. It did this primarily by encouraging lenders to assist delinquent or at-risk mortgage borrowers by lowering interest rates to the point that total monthly housing payments would not exceed 31% of their gross monthly income.
Another option
Some borrowers may prefer going through a foreclosure-prevention agency such as Foreclosure Shield rather than dealing directly with lenders. The counselors can answer questions about what specific documents are needed, ensure that applications are complete, and take the time to explain the proposed deals. In addition, the counselors offer advice on getting spending under control. Budget counseling is critical.
One point to remember is: be patient. After the application process, the lender will decide the approach it wants to take to reducing your debt: lowering your interest rate, extending the life of your loan, or reducing your debt balance. The lender's first step will be to get your payment down to 38% of your monthly gross income. Once the debt is reduced that far, the government will pay the lender to lower it to 31% of income. At that point, the loan will be rewritten, you will get the new paperwork to sign and the new payment will go into effect on your next bill.
This process has been taking several weeks to a month, so be patient. Although the banks expect it will get quicker as their personnel become more familiar with the modification plan.
