The Obama mortgage modification service has two vital components for helping homeowners, who are financially distressed, in avoiding possible foreclosures. One of them is the home loan modification program and the other one being the home refinancing schedule. For modifying mortgages, borrowers must have missed few monthly payments or need to be at an imminent risk of a mortgage loan default. If eligible, a borrower can keep his home for long by paying manageable monthly installments regularly. On the other hand, home refinancing mechanism is provided to homeowners who are underwater on their existing mortgage loans on account of fallen values of their homes but regular on monthly payments for the past 12 months. Refinancing will allow such homemakers to reduce monthly payments to affordable levels and thus, retain homes.
Nevertheless, there may be some difference on the qualification criteria that apply to both these home saving alternatives for mortgage modification loans. If a homeowner is faced with a foreclosure he can modify mortgage only if the below mentioned conditions are being met.
1. Current home had been secured prior to January 1, 2009.
2. Mortgage must not be guaranteed by Fannie or Freddie.
3. Borrower must be delinquent on payments or fear he might go that way.
4. Unpaid mortgage loan balance cannot exceed $729,750 for single unit home.
5. Applicant has to be primary resident in the home for which mortgage is to be modified.
6. Homeowner must draft and sign a letter highlighting financial hardship situation with valid reasons.
7. If Debt-To-Income (DTI) ratio is more than 55%, borrower will have to undertake course in debt counseling.
On the other hand, if a homeowner is "underwater" on mortgage, he may seek refinancing mortgage modification services provided the following conditions are satisfied.
1. Mortgage must be owned or guaranteed by Fannie or Freddie
2. Borrower must be current on monthly payments for the past 1 year.
3. Homeowner cannot draw cash from new loan for repaying other debts.
The remaining guidelines will remain the same but still the task of identifying the right option for your situation may appear challenging. Not many borrowers can qualify that easily considering the complex and hard to interpret eligibility guidelines as well as process requirements. Hence, for deciding the correct home foreclosure prevention alternative, it could be better if borrowers took advantage of help which is easily available on the internet. Just make sure that you are working with a mortgage service provider that is reliable and reputed.
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