Mortgage Relief Program Qualifications: Determine Loan Mod Eligibility

July 21st, 2011 | Posted in Debt Relief

Actually this FHA Hope Program may prove to be HOPELESS, for both home owner’s and lenders…..Let me explain. The President has signed into law legislation that will allow HUD’s Federal Housing Administration (FHA) to continue providing targeted mortgage assistance to homeowners. The Hope for Homeowners program will continue FHA’s existing and successful efforts to provide mortgage relief program qualifications aid to struggling families trapped in mortgages they currently cannot afford.

The second and more common method of defending against foreclosure, either in judicial states or trustee states, is to work with your lender towards some sort of mutually beneficial financial arrangement that lets the homeowner continue residing in the house at some sort of modified payment plan. This method is more commonly referred to as a loan modification. The Departments of the Treasury & Housing and Urban Development established the Making Home Affordable plan to help homeowners and lenders work together in the best interests of both parties. In the process, they established some loan modification guidelines to help servicers accomplish these goals.

The property must also be the principal residence and the homeowner cannot own more than one property. How if the lender did a modification of the original loan amount they wouldn’t necessarily have to reduce the loan amount, but instead just reduce the interest rate and extend the period of the loan to make it affordable. Now this may seem as a good deal for the home owner….but keep reading. The new loan will be at today’s current rate, versus with loan modifications interest rates can be negotiated way below today’s rates, sometimes as low as 2%.

Innocent Spouse Relief- The Innocent Spouse Relief is a very beneficial spouse protection program, especially owing to the high rate of divorces in the U.S. In fact, Congress is currently looking into reviewing the 2-year rule on the program, which gives taxpayers a 2 year window to apply for the relief. The Innocent Spouse Relief program is filed by a spouse who claims to have no prior knowledge of a tax problem that leads to penalties and other tax liabilities. For example, a spouse may have gotten some income in a given year and hide it from his or her partner and did not indicate the income in the joint tax returns. If the IRS caught up with the couple, the innocent spouse can claim tax liability exemption through the Innocent Spouse Relief program.

This shared equity starts at 100% to FHA during the first year and will remain at a minimum of 50% to FHA from five years throughout the duration of the mortgage. For the current lender, it will make more sense to modify the loans themselves than to participate in the FHA Hope For Home Owners Program. And for the home owner they will have more flexibility in rates and terms and they won’t have to share they built up equity with the government.

Learn more about Obama Mortgage Relief Plan Qualifications.