Home Affordable Mortgage Program: Can The Reverse Mortgage Program Work For You?

Facing foreclosure on your home and wondering if a loan modification will stop the process and help you keep your home? Once the process has begun is there anything you can do to delay the foreclosure in order to seek another solution? The Treasury Department has set up standard guidelines for just this type of situation-so you need to know what could happen and how to make certain that you take advantage of every opportunity available to save your home.

President Obama wanted to be certain that before a home goes to foreclosure the bank has explored every option to try to keep the borrower in their home. That is why under the government plan called HAMP, banks are required to delay the foreclosure while the homeowners loan modification application is being reviewed for eligibility. Although the clock keeps ticking, the home cannot be sold out from under you as long as your loan mod application is submitted and being reviewed. That is why it is so critical to understand what your rights are under the federal plans and just how you can take advantage of these home rescue options provided by the government.

the banks are starting to realize that owning more real estate just means more losses on the books and that just reducing the rate and terms on a loan doing a home loan modification doesn’t always make the home affordable. By reducing the principal it will turn the trick to make the mortgage payment work. HAMP has added a new wrinkle to it’s modification program called the PRA or Principal Reduction Alternative. When the reduction of the interest rate and extension of the term don’t meet the debt to income ratios they can reduce the principal, if the loan exceeds the value of the home, until it makes the payment affordable at 31% of the borrower’s gross income. The average principal reduction has been $69,500.

It is very important to stay on top of the application to make certain that all the required documents have been received and that your file is in review. Of course, if your application is reviewed and it is determined that you do indeed qualify for HAMP, you will be offered a loan mod and your foreclosure will be stopped. How can you stop foreclosure and be certain that your loan modification application has the best chance of approval? The only way to take control of the situation is to understand just what it takes to get approved for a loan workout, then prepare and submit your application correctly.

There are several options that a borrower can choose when opting for a reverse mortgage, which is why it is essential to first get counseling from a reliable financial advisor and understand the available options fully so that there are no issues and hidden clauses discovered later. Most HUD approved lending companies provide counseling so that there are no problems later.

Learn more about Obama Making Home Affordable Mortgage Program.