Can the Obama Home Mortgage Plan save my home? In some cases, it can if the homeowner qualifies and the bank agrees with the application of the borrower. The Obama Home Mortgage Plan, also known as HOPE, was set up to help homeowners avoid foreclosure. It was hoped by many to be the life raft that was needed. The Obama Home Mortgage Plan is a loan modification program. In other words, it will change the terms of interest rates and length of the loan.
These guidelines are meant to help a borrower understand the process and not spend time applying if not qualified. The program is intended to lower mortgage payments to 31 percent of the borrowers income. If the borrowers is not employed, seeking a short sale under the new Obama Short Sale Program would be better. In order to qualify for the HOPE program, these conditions must apply:
- The mortgage loan must have been taken out before January 2, 2008.
The owner of the property must have made at least six payments on the loan.
- The borrower must have been honest on his application, did not miss payments on his loan to qualify for the modification, and has not been accused and convicted of fraud in the last ten years.
The home must be the primary residence of the borrower, not an investment property or second home.
- What is loan modification for the Obama Home Mortgage Plan? As stated above, the HOPE program is meant to either reduce the loan debt or the terms. The three steps involved in the Obama Mortgage Plan include reduction of interest rates, extension of loan term (40 years instead of 30 years) and forgiveness of principal over 90 percent of appraisal (rarely done). Most banks will look at loan debt forgiveness as a last resort. The top four banks went before the Housing Financial Services Committee and stated that principal reduction would be considered last and that it was preferable to reduce interest rates by two to three percent and increase the term of the loan before reducing the principal amount. One of the top four banks stated that principal reduction would only be considered for those in foreclosure.
How to submit an application for the Obama Home Mortgage Plan. By going to the HOPE website or calling the phone number located on the website, you can speak to a counselor about the possibilities of a loan modification program. This program is free; the counselors are there to help you communicate with your bank and create a modification program. The site also gives the borrower suggestions on how to avoid foreclosure with such things as refinance options, short sale options, deed in lieu of foreclosure, delayed payment options and more. The telephone number for the HOPE plan is: 1 (888) 995-HOPE.
- As much as the government tried to implicate this plan, it has been seen as a failure by many. The plan is promising to help seven to nine million homeowners, but the statistics have shown that only a small portion were approved. Although it must be stated that some of the loan modifications were declined due to the homeowner purposely falsifying their application and missing payments hoping to qualify. As a result of many impending foreclosures, President Obama initiated in April 2010 a short sale plan requiring all banks answer short sale request within ten days. There are some incentives to help the seller move and to negotiate a second trust deed on the property.