Because of the eviction epidemic that has completely devastated our financial system, several local and federal government programs were started to help provide relief to property owners. Most of these programs have since come and gone, but a few still exist. The most notable is what many call "The Obama Plan" or the "Home Affordable Mortgage Plan". This was a government plan that was created to be able to assist eviction victims across the nation. It was indented for the bankers to help the consumers to modify their loan, even if they were upside down in equity.
In normal refinancing, a mortgage servicer will usually refuse applications when the home's value has fallen below the loan amount. This is a major point that the government was able to change. It was an major component, because home values have plummeted through out the nation.
So, if you made the effort once to obtain refinancing from a traditional bank in the past, you may be accepted for a new loan modification. The Obama Plan assures the lenders that they would not lose their investment. But banks were never actually required to take part. Some half a million loans were submitted for consideration, but figures of approval are reported as low as 2000 cases. Only 0.4% approvals of the total 500,000 applications is pretty discouraging if those figures are accurate.
In order to go through the plan, your original mortgage must have originated on or before January 1st, 2009. Two recent pay stubs and the most recent tax return must be submitted and you must sign an affidavit of financial hardship.
In addition to the mortgage modification, which will be available only until December of 2012 unless changes to the current program are made, there is a refinance program that ends in June 2010. There are other choices for you that can help you prevent eviction as well.
The alternative to applying for a government program is to utilize a private company that has experience negotiating with lenders. You see, the government program was based on an already working process that lenders were using on a daily basis. Loan modifications were far from being a new process and have been happening for many decades. For companies with experience talking with lenders, getting a loan modification was almost second nature. This wisdom in negotiating was completely absent from the governments plan to prevent the evictions. Instead, they made their program voluntary and left it up to the mortgage companies to work with the consumers.
Obviously this was a bad idea, since mortgage servicers are notoriously bad at working out a solution with the consumer. Lenders and servicers are also under a tremendous amount of financial strain; so the lowest paid employees end up being the first (and mostly final) line of support for the eviction victim. The system was error-ed from the beginning, which explains such a low success rate.
If you are facing eviction, it's our recommendation to choose to negotiate with your mortgage servicer on your own for your best possible payment, rather than trusting the government to save your home. We still tell you to apply for The Home Affordable Mortgage Program, but just make sure you don't count on actually getting it approved. It's crucial that you have a back-up plan; and it would be in your best interest to find a professional to help explore all possible options.
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Nick publishes information on how borrowers can avoid foreclosure on their own. His site describes various methods to do this, including foreclosure loans, mortgage modification, filing bankruptcy, and more. Visit the site to download several e-books explaining various aspects of how to save a home: www.foreclosurefish.com/
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