By Eric Banks
Mortgage Assistance Program has been announced by president of United States on February 18, 2009. His relief program has come in to practice since March 4, 2009. In this effort, the Federal Government has allotted $ 75 billion to help the home owners in need. But would this plan actually save all the foreclosures happening across the country? As the experts are predicting, it would at least help 5 million home owners in the USA.
· The key is that this relief program only covers those loans & mortgages that are insured and / or owned by Fannie Mae & Freddie Mac. The home owners can get this information from their lender.
· The program stresses on the long term affordability of the home loans for the home owners. It clearly states that with falling property rates, none of the lenders can mitigate their loss with foreclosure. So, it is better for them to go for loan modification. To lay more stress on the same, Obama's new strategy has offered $ 1000 per loan modification for the lenders.
· This plan has also made a practical approach to evaluate the monthly installments. It reads that the new monthly payments legally can not exceed 31% of the borrower's monthly income. The plan also states that the total of all loan payments, credit payments and installments can not exceed 55% of the pre tax monthly income.
· The plan does offer help to avoid foreclosure in a way. It promotes loan modification to a great extent and that of course is the best strategy to save your home.
· Going further, this plan would not be of much help to those who have drawn 'jumbo' loans that is upto the highest limit. (Again it they are owned and / or insured by Fannie Mae & Freddie Mac, they might be eligible.)
· Even the loan medication clauses now seem to be more reasonable. Earlier if you do not own 20% of the home equity you could not go ahead with loan modification. Now equity share is no longer the criteria. You have to compare the current market value of the home with the mortgage amount. If the mortgage value exceeds 105% of the current market value of the house, you are eligible for a loan modification legally.
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