The federal loan modification plan signed into law by President Obama features standardized terms and eligibility requirements designed to help nearly 4 million homeowners. The plan is called Home Affordable Modification or “HAM.” Funded with $75 billion in stimulus money, it offers a unique pay-to-modify feature that actually rewards lenders and borrowers for modifying eligible loans. How do you apply and qualify for this plan, and what lenders are approved to offer it to their customers?
How to qualify: You must be able to meet certain requirements to apply for a loan modification using this federal plan. If you can answer yes to these questions, you may be a good candidate.
- Do you live in the house as your primary residence?
- Did your loan originate before January 1, 2009?
- Is your loan amount less than $729,750?
- Is your current mortgage payment equal to more than 31% of your gross income?
If you can meet the basic criteria, you can modify your current loan with an interest rate reduction as low as 2% and extend your term up to 40 years. In some cases, part of your principal balance may be deferred or forgiven to meet a new target payment of just 31% of your gross monthly income.
Which lenders are approved to offer this federal loan modification plan? Here is a list of banks and servicers that have signed formal agreements with the Treasury Department and are offering the program to eligible borrowers:
Approved lenders:
- Aurora Loan Services LLC
- Bank of America, N.A.
- Carrington Mortgage Services, LLC
- Chase Financial LLC
- Citi Mortgage, Inc.
- Nationwide Mortgage Loan Service LP
- GMAC Mortgage LLC
- Green Tree Servicing LLC
- home loan services, inc.
- Nationstar Mortgage LLC
- Ocwen Financial Corp, Inc.
- Residential credit solutions
- Saxon Mortgage Service
- Select wallet service
- Wells Fargo Bank, NA
- Wilshire Credit Corporation
Additional banks and servicers are being added as they sign their formal agreements with the Treasury Department. If your lender or servicer is not listed, you can call them and ask if they offer the federal loan modification plan. Many banks accept applications while awaiting formal approval. At least you can log into the system and be online for review.
This plan offers a unique opportunity for homeowners to apply and qualify for an affordable modified mortgage, so make sure you understand the approval requirements before contacting your bank. Homeowners who can provide acceptable information on their loan modification forms and can clearly demonstrate in black and white that they meet the guidelines will be approved. Incorrect or unacceptable applications will be denied, so take the time to learn and prepare before completing your paperwork and contacting your lender. When you prepare ahead of time, you can make any necessary adjustments to your financial statements before your lender reviews them. Be smart, be prepared! It could be the difference between getting the help you need and deserve and being denied it.