The  program qualifications for 2012 have been updated and the Federal Treasury Department has made it even more attractive for lenders to modify struggling borrowers mortgage loans.  The program has been around for 3 years, but the low percentage of completed loan mods have been a real disappointment.  One of the most difficult parts has been trying to get the lenders to reduce the principal balance for underwater homeowners.  The Fed has addressed this problem with the 2012 updates.

PRA-Principal Reduction Alternative was introduced last year, but very few homeowners saw any benefit to this feature .  Lenders have been hesitant to actually forgive chunks of principal, even when the borrower owes significantly more than their home is currently worth.

The new  program enhancements include:

  1. Tripled incentives for principal reductions on qualified  loan modifications
  2. 63 cents for every dollar of principal reduced instead of the previous 22 cents per dollar
  3. $20 billion set aside for principal reductions on qualified borrowers
  4. Fannie Mae and Freddie Mac loans are now included in the PRA program
  5. Investor owned properties are now eligible, as long as the home is rented and tenant occupied (not vacant)

So, what do these new program qualifications mean for the average homeowner?  Because one in four borrowers currently owe more than their home is

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worth, many economists feel that the only way to see a real housing recovery is to convince lenders to reduce mortgage balances and give borrowers the incentive to stay in their home instead of walking away.  The Fed seems to agree, and with the new higher incentives being offered to lenders, the hope is that more and more homeowners will receive a loan mod that includes a reduction in their loan balance.  Twenty billion dollars has been allocated to help underwater borrowers get a lower mortgage balance.

This is not a freebie, however, and borrowers must still meet the standard  program qualifications in order to qualify for a loan modification.  Unfortunately, just being underwater on your mortgage is not enough to qualify, you must also pass the criteria for approval, and this includes showing your bank the acceptable monthly income, monthly household expenses and assets.  Your financial worksheet must prove that your specific situation will fit the loan mod guidelines, and only then will you have a shot at a loan workout with a principal reduction.  Make sure that you prepare the application paperwork correctly, make any necessary adjustments to your budget figures ahead of time, and give yourself the very best shot at loan mod approval.

Get the real answers you need to prepare your  loan modification application correctly-use the # selling resource for homeowners, The Complete Loan Modification Guide kit and Loan Mod Calculator.  This system was designed specifically to help homeowners apply and qualify for a loan mod, and the Calculator will

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automatically compute and display your specific requirements for income, expenses, and assets.  Avoid mistakes and get it done right, visit MyLoanModificationCenter.com today.

2 Responses

  1. Kathleen Reis Said,

    I applied for HAMP and have a Fannie Mae loan. I was unaware, and no one at Fannie Mae (or my servicing Bank) told me that I had to be 3 months delinquent on my mortgage to qualify. As a result, my application was denied by Fannie Mae and my understanding is that homeowners only have ONE opportunity to apply for HAMP. Is that correct?

    Posted on March 29th, 2012 at 3:51 pm

  2. Ramona Said,

    no that is not correct. i know for a fact. simple call them up and ask to apply for the Hamp. dont even bother explaiining unless they ask. then tell them that you did not understand all of the program and now feel you qualify. I have applied 4 times. now i warn you, you must be diligent in sending in paperwork they ask for., and I forewarn you they ask for the same paperwork over and over and over but you keep sending it over and over ands over and do it patiently.. i think they do that trying to make you give up. i finally was approved for my trial period and was given a new figure for my house payment. my first trial payment of three is due june 1st and if i make the 3 trial payments on time i understand new papers locking that in will then be signed. good luck. p.s. i have been working on this for a period of 2 years but the most recent application has taken 8 months

    Posted on May 19th, 2012 at 1:41 pm

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