Simplified Guidelines for the Home Affordable Modification Program
When word spread around concerning the Affordable Home loan Modification Program there was a lot of excitement. It meant hope for millions of families who had succumbed to a deteriorating economy. This hope for some was devastated because of the guidelines that weren’t heavily publicized until July of 2009 that many still didn’t understand. While these individuals may have been eligible, the lack of understanding, not just from their part but on the part of the professionals, stood in their way of getting this much needed relief.
The guidelines, for those who don’t know, specify that an applicant can only owe certain amounts on their principle loan depending on the amount of units that their home consists of. The modification can also only be for a first mortgage – not for second mortgages – and it has to be on the primary residence of the applicant. It cannot be for an investment property.
As for the requirements regarding the monthly payments, the payment has to exceed 31% of the gross monthly income because the modification reduces it to under that percentage. For the budget sheet, the net income of the home has to be more than the expenses or the application will be denied. This is due to the fact that the lender can’t believe a person will make even the modified payments when they can’t afford the basic living expenses.
Modifications are created to assist individuals who are struggling with their finances but they have to be able to prove that they can make the modified payments without defaulting. It might be difficult but there are tens of thousands of families or more who have proven that already. With some adjustments on the application for those who need it, and the paperwork to back up all of the statements, homeowners can receive these modifications but they must first understand what is required of them so that they can give the lender exactly what they want to see.
