The Making Home Affordable Program has been proposed to help save eligible struggling homeowners from avoiding default if they are in imminent danger of defaults and prevent foreclosure. The guidelines crafted for this program necessitates lenders to make a reduction in the monthly payments of borrowers eligible for federal loan modification program.

The Making Home Affordable program has been proposed to help save eligible struggling homeowners from avoiding default if they are in imminent danger of defaults and prevent foreclosure. The guidelines crafted for this program necessitates lenders to make a reduction in the monthly payments of borrowers eligible for home loan modification. Loans Store has a network of loan modification attorneys who can work with you to qualify for a loan modification process that is suitable for your specific needs.

The Program is now meant to act as the industry standard practice for lenders to verify prospective modification applicants. The federal home affordable modification program works within the guidelines set up for eligibility and authentication principles:

• Loans must have been started on or before January 1, 2009.
• First-mortgage loans on properties occupied by owners with remaining principal balance up to $729,750 for one unit.
• Higher limits decreed for properties with 2-4 units.
• All servicers for loans owned or guaranteed by Fannie Mae and Freddie Mac are eligible.
• The existing principal plus interest along with property taxes and homeowner's insurance payments of the borrower are over 31% of their gross monthly family income.
• All borrowers are required to document income, along with signed IRS 4506-T, proof of income i.e. paystubs or tax returns and are required to submit a signed affidavit of financial hardship along with the home affordable modification program application.
• Owner occupancy status will be certified by borrower credit report and other documentation.
• Lenders and servicers to modify at risk borrowers who are current on their payments but may be at imminent risk of default.
• Home loan modification to be available until December 31, 2012; loans can be modified only once.

The above mentioned guidelines apply for being eligible for the loan modification program and not for qualifying for an actual modification. Usually, such borrowers are unable to refinance because their homes lose value, approaching their current loan-to-value ratios above 80%. The Home Affordable Refinance Program will allow many of these borrowers to be eligible to refinance their loan and take advantage of lower mortgage rates. They can also refinance and convert an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed rate loan.

Lenders may pardon principal to achieve the targets. Principal forgiveness by a lender can be used as a standalone process or initial to any step in the Standard Waterfall process of avoiding foreclosure. If principal is forgiven and the rate is not reduced, the rate will be fixed at the existing rate and taken as a modified rate for the purposes of the Interest Rate Cap. Principal forgiveness the payment reduction cost share is to be based on the change in the borrower’s monthly payment from 38% to 31% DTI ratio and is no more than five years.