Obama's Mortgage Relief

Practical mortgage solutions for our current Housing climate. Get your loan modification!




The housing crisis that has became a huge problem in the last few years it is affecting just about every part of the country. The problem started with the sub-prime market meltdown. Even though most of the predatory lending has ceased, there are many home owners that are feeling the sub-prime melt down and the effects of it. The market will normally correct itself in time. However our economy is in turmoil due to the whole sub-prime lending primarily from 2005 and 2006. Some of the states have been greatly affected, especially Florida, California, Arizona, and New York. Many home owners started out with low teaser rates on their adjustable mortgages with the first few years at an attractive rate, and when that time had passed the reality of the new higher mortgage began to set in. Now some home owners are seeing their mortgages almost double in a few short year. Burrowers took on these low rates to start out with a comfortable payment hoping to get into a higher paying job or just wanted to get some appreciation in their homes. When that did not happen then there was real trouble for many home owners trying to make their new larger house payments. The blame can not be only be placed on the predatory lenders that preyed on borrowers, but also on some of individuals taking out loans they know they could not afford once the rate adjusted.

Government has been trying to lend a helping hand with the 780 billion dollar bail out plan, but their efforts might not be as helpful the to average home owners as it is to the big financial institutions that the funds might be primarily allocated to. Most resident need help and they need it now! The best ways to try to save home owners is to talk to their actual bank, mortgage companies, or their loan servicers. For the average home owner that is in imminent danger, he/she should contact their lenders as soon as possible. Many lender are willing to work with home owners that are in serious jeopardy of defaulting on their loan. There are many programs that can be worked out to try to avoid foreclosure. The main thing that are being offered currently are Loan modification, short sale, deed in lieu of foreclosure, principal forgiveness(even though less common):

Loan modification is restructuring the loan and resetting it at lower the monthly payment. Generally, this is a viable solution and it's common right now. The total amount past due can be rolled up into the principal balance to bring the mortgage current and lower the monthly payments.

Short sale is selling the property to prevent foreclosure. Your lender has to approve you for this option, and you will need a realtor to find a buyer for you. Your realtor submits your prospective buyers offers to your lending and your lender reviews the offer for approval. However, be careful with this option. For example, lets say you owe $200,000 on your home loan and had it short sold for $150,000; you may be liable for the taxes on the remaining $50,000. I might be viewed at income and taxed accordingly with interest and penalties if the taxes on that income is not paid off in timely manner to avoid late charges.

Deed in lieu of foreclosure is the lender taking back the property therefore relieving you of the financial burden. These are mostly buyers who have some equity in the property that ensures when the property is auctioned off they can re-coup any possible losses. There are many more options available for distressed homeowners.