The Loan Modification Hype

With the housing crisis, many are wondering just how they are going to get themselves out of a situation that they never dreamed they would end up in. Now, President Obama is offering up some hope. But, who is this the new hope really going to help out?

Loan modification loans are supposed to be able to help those who are upside down on their homes, meaning they owe more than it is worth. They are also supposed to bring down their monthly mortgage payments. There are some very stringent qualifications for these loans. So stringent in fact, that many are not going to qualify.

First of all, you have to be current on your mortgage. A homeowner will not qualify for a loan modification if they have been more than 30 days late, even one time in the past 12 months. Most that need the help need it because they are late are either in foreclosure or close to it. Unfortunately, this program will not help them.

Another requirement is that the monthly mortgage payment be more than 31% of their monthly "gross" income. For most, their gross income is significantly greater than their take home pay. Therefore, this requirement will disqualify many who are in need of help.

Great credit is the key to obtaining a loan modification. Unfortunately, the people who need this type of help the most are in need because their credit is failing due to job loss. Therefore, those who have lost their job and can qualify for the 31% rule will be disqualified due to the great credit requirement.

In reality, there are not many people who this "help" is really going to benefit. But, for those who are working, with good credit and are in need of a cheaper payment, it will do wonders for their household finances.

Rob_Cole

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