Loan Modification Through Obama’s Making Home Affordable Program

By Simon Volkov

Borrowers in need of a loan modification should consider applying for Obama’s Making Home Affordable program. To apply for this government sponsored program, homeowners must work directly with their mortgage lender. In order to obtain a successful outcome, homeowners should take time to become familiar with the program and eligibility criteria.

The Making Home Affordable loan modification program requires homeowners to be current with home mortgage payments. Homeowners cannot have any payments delinquent by more than 30 days in the previous twelve months. Additionally, homeowners must meet debt-to-income ratios and provide proof of financial hardship.

Banks require borrowers to submit a loan modification application. Borrowers are required to provide financial documents including wage earnings, detailed list of income and expenses, credit report and current tax return.

Some banks require borrowers to submit a 4506 tax form which authorizes lenders to obtain a tax transcript from the Internal Revenue Service. Tax records are required to ensure applicants earn adequate income to obtain a loan modification.


Tax records are scrutinized to ensure the amount of income provided on tax returns is the same as the amount recorded on the original loan documents. Borrowers who inflated their income on the original loan, loan modification or mortgage refinance documents could potentially face mortgage fraud charges when applying for assistance through Making Home Affordable or any other mortgage assistance programs. As long as homeowners submit accurate income, there should be nothing to worry about.

Under Obama’s Making Home Affordable program, homeowners can apply for either a loan modification or mortgage refinance. Both participating lenders and homeowners can receive monetary incentives. Lender participation is voluntary, so borrowers must contact their lender or visit the Making Home Affordable website to determine lender participation.

Borrowers must remain current on future loan payments. Just one missed payment will void the cash incentive. Lenders receive up to $3000, payable in $1000 increments over three years. Borrowers can receive up to $5000, payable at the rate of $1000 per year for five years.

When mortgage loans are modified, lenders reduce monthly payments to no more than 31-percent of the homeowner’s gross income. The amount includes all facets of the home loan including principal, interest, insurance and homeowner association dues. In order to adhere to lending criteria, banks temporarily reduce the rate of interest and extend payment terms.

Making Home Affordable will unveil two additional programs by the end of April 2010 to help borrowers facing foreclosure. Borrowers struggling to meet mortgage loan obligations can obtain low- or no-cost housing counseling through the Department of Housing and Urban Development. HUD housing counselors can direct borrowers to programs which can help them become current with home loan payments.

The United States government has set aside billions of dollars for Making Home Affordable programs. Both loan modifications and mortgage refinance programs are available at no cost to qualified borrowers. Homeowners should beware of any company or organization that charges a fee for loan modification or foreclosure assistance.

Eligibility requirements and program details are available at A list of approved nationwide housing counselors can be found at Borrowers who take advantage of these programs improve their chance of saving their home ten-fold.

About the Author: Author and real estate investor, Simon Volkov, offers easy-to-understand information about

loan modification

and mortgage refinance programs, along with highlights of the Making Home Affordable program via his website at

. Visitors are encouraged to subscribe to Simon’s mailing list to receive the latest mortgage refinancing and loan modification information.


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