The Federal Loan Modification program has been set into motion by the Obama Administration, functioning as an intended stimulus to the housing market.
But, specifically who benefits from this federal program? Who gets the bail-out money that has been allocated, 75 billion dollars to be exact? The funding to this housing stimulus bill initially goes to the lender.
Banks and lenders receive $1000.
00 incentives to grant loan modifications.
What they are actually doing is completely rewriting a mortgage that is in default to allow the homeowner to obtain lower monthly payments and be able to avoid foreclosure.
They can lower interest rates, lengthen the terms, forgive late fees, and even reduce a little principal to accomplish this new house payment.
The payment must fall under 31% of the homeowner's gross monthly income.
Besides getting this sweetheart of a mortgage deal, the homeowner also receives $1000.
00 incentives for each year that they are current on their loan, up to five years.
That is potentially $5000.
00 in principal that you are able to pay off just for paying your payments on time! The lenders receive some rewards after the fact, also, contingent upon your performance in the new mortgage.
This program is one of the bail-out programs that is targeted to the little guy who has had a few bad breaks in this present economy.
It doesn't go to big companies, but to little families.
These families have had a situation happen in their lives that would qualify as financial hardship.
This means that something happened that they had no control over that reduced their income or raised their expenses.
There are some other application guidelines that you should explore if you think you might qualify.
This is a great opportunity, if you do, and it only lasts until December 31, 2012.