As the US economy continues to plummet, more and more Americans are drowning in the rising unemployment rate, ballooning mortgage dilemma, and the pinch of fluctuating market prices. It is not surprising that at this time of the economic downturn, lending institutions are stricter in approving loans. The US government has given bailouts to lending companies, and other providers of basic commodities through the stimulus package. To help America recover from the damages caused by the economic downturn, the administration launched the Obama Debt Recovery Program.
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One of the highlights of this program is the Federal Loan Modification Plan. Here are the details and ways by which average Americans benefit from this portion of the Obama Loan Debt Recovery Program.
The Obama administration has allotted $75 billion to settle troubled loans and mortgages and make housing accessible and more affordable to citizens. The administration hopes to put a halt on the burgeoning foreclosure rates in the country by giving incentives to lenders and borrowers for successful federal loan modification cases. Once loans are restructured, will lighten the financial burdens of struggling borrowers through lower interest rates and principal payments.
This provides answer to the needs of current and struggling homeowners. Struggling homeowners can find relief in this program because it modifying loans can reduce mortgage rates and make them more affordable. It also helps those whose homes are threatened by foreclosure. Home payments will be adjusted to 31% of the borrower's monthly income, helping borrowers avoid a default on their payments.
Current homeowners who own homes that have decreased in value can benefit from this program, as well. If the loan is guaranteed by Fannie Mae or Freddie Mac, a current homeowner can refinance their mortgage a loan worth 105% of its market value.
To quality for this government program, you must be experiencing one of more of the following hardships:
o bad credit
o loss of employment
o salary deduction
o 100% finance
o Delayed mortgage payments
o Negative amortize
o Foreclosure
o Death in the family
o Natural disaster
o Unexpected home repairs
o Major illness
If you are experiencing one or any of these, the next step is to provide your lender the following documents:
o Hardship letter - It is a letter addressed to your lender that contains an explanation of your hardship and a proposal of a loan deal that you want to have with your lender.
o Financial Report - Your financial report will be one of the most important documents that your lender will look at in considering your application. If your financial report shows that you are a great risk and that you do not have the capability to make the lowered monthly payments, you have a lower chance for your application to be approved.
o Bank reports and statements
o A detailed list of your monthly household bills
o Copies of latest payrolls and w2 forms
Recovering from the repercussions of the economic decline will take time. While the government is implementing ways to improve the living conditions of the people and stabilize the fluctuating financial and mortgage crisis in the country, citizens are urged to take the initiative to access these government grants.
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