Making Home Affordable: The Truth About Obama’s Making Home Affordable Plan
The United States is still in the depths of economic recession, and that spells trouble for many homeowners. Unemployment is at an all-time high, as are people who are taking forced pay cuts or decreased work weeks. Less household income means less ability to pay your monthly mortgage bill on time. One of your alternative repayment options for your mortgage is loan modification. If you’re a Wells Fargo customer, this is what you need to know about getting good results with a Wells Fargo loan modification – here’s how to go about the process.
First, check out their website or talk to a Wells Fargo representative about your options. They have several alternate repayment plans available for struggling homeowners, and no single one is right for everybody. If you’re most interested in loan modification, you have two options: the Wells Fargo modification program, or the federal government’s making home affordable plan.
Last, the person had to agree to repay the loan they got through HomeSaver Advance according to the terms outlined by Fannie Mae. The loan would come from their current mortgage company. The person could get a loan to cover the amount they owed. That would include what they were behind in principal and interest, taxes and insurance. If there were any escrow advances outstanding as well as foreclosure and bankruptcy fees, these could be included. Delinquent Homeowner Association dues also could be added in. The maximum available would be the lesser of 15% of the original amount of their loan or $15,000. That could be increased to $20,000 if the mortgage company bore the full risk of loss. This would be an unsecured loan for 15 years. The interest rate was 5%. For the first six months no payments would be required and no interest would be charged. Payment would start in the seventh month. The loan would be paid off over the remaining 174 months. There were no prepayment penalties. If the property was sold, any remaining balance had to be paid in full.
The other option is the government’s Making Home Affordable plan. Making Home Affordable is open to homeowners with a first home on which they owe less than $729,750, and their total monthly payment amounts to more than 31% of their gross monthly income. A Making Home Affordable loan modification will have to be applied for through the federal government, which then notifies and works with Wells Fargo to get you a modification. Not all loans are eligible, so the first step is to use their calculator to see if you qualify for help.
What were the reasons for this? Although designed for people suffering a temporary financial hardship, mortgage companies frequently gave these loans to people who had permanent or long term financial hardships. No analysis was being done to see if they would be able to resume making their regular monthly payments after they received a loan. The entire focus of this program was to eliminate any amount that the people owed. There was no focus on reducing their monthly payment to a level they could afford or reducing the principal balance on their mortgage. The HomeSaver Advance program failed to offer people facing foreclosure a viable way to overcome their financial problems and save their homes.
Learn more about Obama Mortgage Relief Plan Qualifications.
