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Finding a loan modification you can live with and getting your bank to accept it is no easy task. It requires a lot of time, large amounts of patience and determination.

 Banks are swamped with more loan modifications than they have ever had to handle and the dilemma of some loan modifications costing them more money than they are worth. Bringing all kinds of issues, like why would a bank provide help to a borrower through a loan modification if it is more cost effective to foreclose the mortgage?

The complexities behind a loan modification can be scary and frustrating but if you jump through the hoops and stick to your guns you have a good chance of reducing your monthly bills and even saving some money.

To get us started lets answer some basic questions most borrowers that are looking for a loan modification ask?

Do I need to have a job to get a loan modification?
Not necessarily. You can apply for a loan modification even if you don´t have a job as long as you can prove you can pay for the modified mortgage payments in some way or are likely to be able to do so soon. The details of your case will condition what response you get. For instance if you have recently been sacked or laid off from a well paid job and have the skills to get one soon you are more likely to get a loan modification than if you have been unemployed for a year.

Do you have to pay someone to manage your loan modification application?
Not at all. The government is backing a variety of loan modification programs that are designed to incentivize banks and service providers to supply sustainable loan modifications. Government websites and helplines are in place to guide you through the mortgage modification process.
It is true that loan modification consultants can provide you specialized advice on how to fill in applications to maximize your chances of being approved but you can do just as well with a little patience and by reading the instructions carefully.
If you do decide to hire someone make sure they are not one of the many con artists and scammers that are so common now. Stay clear from companies that guarantee successful applications and ask for upfront fees. There is no way to guarantee a bank will accept a loan modification and it is illegal to pay for services that have not been provided.

How do you get the ball rolling?
Call your bank and ask to be put through to the mitigation department. You will then be asked to jump through a few hundred loops and explain your situation. It is a good idea to find out first what paperwork you need and make sure it is all correct before starting your application process.
What kind of information do you need?
You will need W-2s from your employer, a pay sub and details on your savings and investments. You will then be asked to provide an income to expenses ratio and basic paperwork to support your claims. Don´t forget to be honest, any discrepancy that is picked up by the service provider will cause your application to be dropped.

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The objectives of the Obama Loan Modifications program are rather ambitious, to help 7 million people (the number is also quoted as 9 million, depending who you ask) modify their loan in order to afford monthly mortgage payments. In fact the way the program is designed you can save money by modifying your loan. The government is seriously backing this program with their big guns, namely $75 billion of funding. As always with these programs there are technicalities to deal with but the gist is rather simple to understand.

The loan modification program provides incentives to banks and service providers to modify your loan to a more sustainable monthly payment if you qualify through the trial period. The three month trial period tests if you are on time with your payments.

If you are, you receive a bonus that goes towards paying the principal of your loan. After that, every year you pay your mortgage without being delinquent on any payment another bonus is paid towards your mortgage principal.

These bonuses are worth extra because they pay the actual cash you initially borrowed, on which you will not have to pay interest. Who qualifies? This is one of the prickly areas of the program. The Loan modification aid program was designed to be as open as possible. You don´t have to be behind in your payments to qualify, just struggling to meet the monthly payments with your current income.

However the issue gets a little complicated due to a clause that limits a lot of home owners that are struggling. You can only qualify if your mortgage represents more than 30% of your monthly income. If it is less you will not qualify. This clause is actually under revision due to the fact that most borrowers don´t only owe on their mortgage but on their car, their credit cards, etc… This causes some of the most desperate home owners that owe money from various lenders not to qualify for the help they need. There are two main groups that can qualify for loan modification.

Those that want a loan modification but that didn´t qualify because the value of their home dropped and those that are on the brink of foreclosure. Either of these groups can get a loan modification if they comply with the programs requirements.

 Don’t forget.

It is free to apply for a loan modifications. What is more, the government is paying banks to give you loan modifications. It is therefore a great idea to not trust companies who ask for expensive fees to get your loan modification processed. The best advice you can get is for a change free. Contact the Home Affordable Mortgage Program or any of the other government housing departments.

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Use any metaphor you want: the ticking clock, sands running through the hourglass or pages falling away from the calendar. The fact is, time is running out to claim the $8,000 first-time homebuyers tax credit.

You know that your home's value has tanked. So why doesn't the blasted tax man? Home prices fell 27% from the 2006 peak to the end of 2008, according to the S&P/Case-Shiller Index, while the amount municipalities collected in property taxes rose 12% from 2006 to 2008.

You know there is something wrong with a system when those that need it don’t qualify. This seems to be the case with the Home Affordable Modification Program. One of the main reasons home owners are turned down is because their loans, by the Home Affordable Modification Program standards, are too affordable.

How is it decided if a loan is too affordable to qualify?

One of the main factors is the percentage of the household income that is dedicated to pay the mortgage. If 31% or more of the household income is set aside for the mortgage and other criteria is also satisfied then the home owners qualifies for the loan modification. However if the percentage of the household income is lower it is too bad.

When this criteria was decided it seemed a reasonable percentage of a household income. It was actually seen as a turn back to old fashioned conservative times when workers where only expected to put one week of their wages toward their housing. Apparently it was in the times of the railway “explosion” that workers were given housing by the railway company in exchange for one week of wages.

However this measure has turned out to be just that, old fashioned. People nowadays don’t only owe money on their homes, also on their cars, their credit cards. In fact credit card debts are right at the top in the catalysts for bankruptcy.

Forbes website reported that William Erbey, chief executive of Ocwen, the second largest U.S subprime mortgage servicer says his borrowers are often saddled with credit card bills and auto loans and will pay those bill before their home loans. William Erbey feels that “ It’s not their mortgage that is out of whack. It’s that their other consumption patterns are out of whack”.

This opinion will ring true for many that have seen how a consumerist culture has moved more and more people to get deeper into debt as a matter of course.
Others criticize the administration and government institutions for being out of touch with reality. Forbes also reported that Chief Executive Sanjiv Das chided policymakers by saying: “This is people solving for a housing crisis not realizing we’re in a credit crisis”.

These comments and the slow start of the Home Affordable Modification Program indicates that it might be the program itself that is ready for modification. A program that worked on the overall debt of a household would provide more practical help than just focusing on one of the debts of this credit crisis. One of the biggest hurdles the government have to overcome is training people to spend sensibly not only provide the cash to pay the debts.

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Sales of newly constructed homes leaped unexpectedly in July to hit their highest level since last September.

Loan modifications are complicated products. It does require some understanding about how they work and what options you have when trying to modify them. Two options homeowners have to protect their homes are loan modifications and FHA refinancing.

Contacting a qualified financial advisor is always a great idea if you are struggling to understand what your options really are. Remember however that often free help is better than paid consultants that can financially from decisions you make through commissions and kickbacks.

The Government is investing heavily in public (that means free) counseling offices that provide homeowners with the best options.
Whatever your choice is, it is a good idea to understand as much as you can about loan modifications and FHA refinancing. Understanding the basics of loan modification and refinance before you talk to a qualified consultant will help you make an educated decision based on his advice.

So which is best for you?

A loan modification or an FHA refinance. Which is best for you might very well depend on who insures your loan.
You need to ask your lender or service provider (not always the same) who insures your loan, Freddie Mac, Fannie Mae or the Federal Housing Administration (FHA). These insurers are authorized by congress to insure home loans. This allows banks to provide low interest rates to high risk borrowers which enables borrowers in trouble to still get a fair interest on their mortgage, modify or even refinance their home. If your mortgage is insured by Fannie, Freddie or FHA your lender is pretty much safe and should be happy to modify or refinance your home.

If your mortgage is insured by Freddie or Fannie then you should apply for Making Home Affordable mortgage aid. There is no real difference between the two of them, they are based more on the location of the borrower than any other significant factor.

If you are insured by FHA you are eligible for the Hope for Homeowners plan. These plans allow borrowers that previously did not qualify for loan modification or refinance to now be accepted, so even though you didn’t qualify in the past apply again and you might get a pleasant surprise.
Making Home Affordable loan modification plan is designed to reduce monthly payments and stabilize the expenses of borrowers in trouble until they can get  a hold of their finances. It is very regulated and fine tuned to provide the specific results the administration is looking for. There are some clever incentives both for borrowers and lenders to encourage loan modifications and paying them on time.

If you are insured with FHA you cannot apply for a Making Home Affordable loan modification but there are other options, some of which are more flexible and can adapt better to your personal circumstances.

Visit a government counselor for free and ask for your best options. It is a good idea to check the website of the program you qualify for to be prepared for what paperwork you need.

Most importantly don’t trust your loan modification to a loan modification company without understanding what they are doing and the effects it will have on your home and credit score.

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2. Requirements to Qualify For An Obama Mortgage Refinance Loan
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National home prices may be on the road to recovery/

The good news is that Citigroup helped 108,000 people avoid foreclosure during the second quarter, a nearly 30% increase from the previous period.