The Federal Loan Modification Program - Getting the Whole Picture
While private lending institutes have loan modifications, sometimes these aren't enough to prevent this foreclosure and that is proven by the modifications that have failed which amounts to over half of them.
The Federal loan modification program promises to have different results than these for various reasons and they might not be understood until a person gets the whole picture.
The Theory behind the Program Obama based this program on his thoughts that if a family could afford to stay in their home that they would.
Other modification programs don't have the same type of insight into them such as the reduction of interest of the cash incentives which give the family more opportunity to be able to afford keeping their home.
It is this difference that makes the modification program more plausible.
Why This Program Is Different Loan modifications from privately run institutes can offer some wonderful benefits to those involved.
There are items in the Federal loan modification program that makes this one even more beneficial.
For some programs, the borrower already has to be delinquent on their account.
The government does not require that.
In most cases, only late payments are required.
This means that the credit rating doesn't have to be as bad in some cases as well.
Other factors that make this program different is that the interest is reduced to as low as 2% which is highly unusual for most modification programs.
Not only that but there are cash incentives such as a thousand dollars each year for up to five years being taken off of the principle amount.
This means not only less interest but overall, less money to pay back.
There are other cash incentives aside from these that families may be eligible for.
All of these cash incentives except for the initial thousand dollars that is removed from the balance are based on consistent payments that are made on time.
Eligibility Requirements There are number of eligibility requirements to be accepted to the Federal loan modification program however they are some exceptions.
These requirements surround the principle left owing on the loan, how many units the home consists of, how much the family earns and whether or not they can prove financial hardship.
One major requirement that there is no exception to in this case is the date that the loan was taken out.
It must date before the beginning of January 2009.
Application Process Although the Federal loan modification program is to make the financial situation much easier for those that are struggling, because of the eligibility requirements, the paperwork and even the negotiations that an applicant has to go through, many times it is easier if they find third party assistance.
There are private companies that offer advice concerning these issues that are more than willing to give a helping hand.
It is recommended that a person contacts these professionals before continuing with their application.