In these tough times I see mortgage holders searching aimlessly to get information on the Internet to protect their homes from falling into foreclosure or rescue it out of foreclosure. The common question that most folks have is will the Obama foreclosure program help me?

Lets explore the choices that a mortgage holder has thats about to fall behind on the mortgage or is already behind in the note. Most of the options will seem barren unless you fit a criteria as listed below.

Assistance for those needing refinancing

This part of the program targets note holders who have kept up to date on their loans. Many of the note holders in this classification have been unable to drop their housing costs through refinancing because of falling home value.

Today, if you’re underwater on your note, owing more than the houses market value, forget about qualifying for a refinance. In fact, at least 20% equity in your home is now a must have, unless you’re using an FHA loan.

The new guidelines should help. Even homeowners with debt that exceeds home value by 5% could be eligible. And there will be no prepayment penalties. But your loan must be owned or backed by Fannie Mae or Freddie Mac.

The Administration estimates that this plan will enable up to 5 million homeowners to get lower interest mortgages.

Who’s not going to qualify?. Mortgage holders whose house values have fallen severely, putting them below by more than 5% are out of luck.

Homeowners with “jumbo” notes also don’t qualify only those with “conforming’ mortgages will. To be very sure what type of mortgage you have, you need to contact|check with your loan servicer or lender. But in general, until the past year, loans above $417,000 were known jumbo mortgages, Fannie Mae and Freddie Mac were not able to buy and guarantee them at all.

All note holders will have to show they have sufficient income to make up their mortgage payments on a timely basis, however it was not mentioned what would be sufficient proof.

Mortgage modification aid for high-risk borrowers

Mortgage holders in default or at risk of going into default may qualify for mortgage modification, which restructure the terms of loans. Anyone with high combined mortgage debt compared to income or who is drowning may be eligible for a loan modification. Homeowners with high levels of other debt, such as car loans, boat loans and credit card debt exceeding 55% of their incomes, may still qualify for a mortgage modification but they’ll be required to accept debt counseling from a HUD-certified program.

If you get approved, your servicer or lender will reduce your mortgage payments to 31% of your gross income. The payment would stay there for five years and then gradually revert back to the conforming loan rates in place at the time.

Who will not be able to get these Options

Investors, those who bought homes for investment purposes, will not qualify for assistance homes must be owner/occupied.

The Plan will also not help those buyers who were irresponsible in their borrowing. All borrowers will be closely scrutinized by lenders and those who acted unscrupulously by, for example, misrepresenting their incomes in no-doc loan applications, would not qualify. Also, in order to protect taxpayers from excessive costs, no loans will be fixed unless it results in a savings compared with the costs of foreclosure. Rates will not be lowered below 2% in any case.

That will disqualify many mortgage holders who simply can’t afford any reasonable mortgage payment because of illness, for example, or out of work. The Obama Plan will not reward folks who bought homes they knew they would never be able to afford, said Obama. “In short, this plan will not save every home.” No modifications for amounts above conforming loan limits would be eligible.

This pretty much answers all the questions we have been getting asked lately about Obama’s plan and it’s requirements. Economic times are rough and if you find you don’t qualify for the Obama plan the best thing to do is hire a foreclosure defense attorney to represent you and protect your home and assets.

Related posts:

1. Two Reasons why Loan Modification is Better than Refinancing your Mortgage
2. Obama Foreclosure Rescue Program Summary
3. Stop Foreclosure with a Mortgage Loan Modification
4. Our Society Is Too Dependent On Credit
5. How To Make Use Of The Adverse Credit Mortgage

Tags: business, Credit, economy, family, finance, government, home, Money, mortgage, mortgage loans, Mortgages, personal finance

This entry was posted on Friday, August 21st, 2009 at 3:08 am and is filed under Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.