Using The 'Obama Plan' To Prevent Foreclosure VS. Stopping Foreclosure On Your Own

Because of the eviction pandemic that has completely devastated our financial system, several local and federal government programs were started to help provide relief to homeowners. Many of these programs have since come and gone, but a few still exist. One many people thing of is what many call "The Obama Plan" or the "Home Affordable Mortgage Plan". This was a government plan that was supposed to be able to assist eviction victims across the nation. It was indented for the servicers to help the property owners to modify their loan, even if their loan became higher than the value of their home.

In average refinancing, a lender will usually deny applications when the loan has become up side down. This is one of the things that the government was able to change. It was an big alteration, because home values have decreased everywhere.

So, even if you have tried and failed to obtain refinancing from a traditional mortgage company in the past, you may be accepted for a new loan modification. The Obama Plan makes provision to the lenders that they would not lose their investment. But mortgage servicers were never actually required to take part. Some half a million mortgages were submitted for consideration, but figures of approval are reported as low as 2000 cases. Only 0.4% approvals of the total 500,000 submissions is pretty discouraging if those calculations are factual.

If you are trying to be accepted through the program, your original loan must have originated on or before January 1st, 2009. Two recent pay stubs and the most recent tax return are required and you must sign an affidavit of financial hardship.

In addition to the loan modification, accessible until December 2012 unless alterations to the current program are made, there is a refinance program that ends in June 2010. There are more alternatives that can help you avoid a Sheriff's sale as well.

The alternative to seeking a government program is to work with a private company that has experience negotiating with banks. The Home Affordable Modification Program was based on an already effective process that banks were using on a daily basis. mortgage modifications were in existence and have been helping property owners for many decades. For companies with experience representing homeowners with lenders, getting a loan modification was almost second nature. This experience was completely absent from the governments plan to stop the evictions. Instead, they made their program voluntary and left it up to the lenders to work with the property owners.

Plainly a bad idea from the start, since banks are terrible at working out a solution with the consumer. Lenders and servicers are also under a tremendous amount of financial strain; so the employee with the least experience end up being the first (and mostly final) line of support for the eviction victim. The program was flawed from the beginning, which explains such a low success rate.

If you are facing a Sheriff's sale, we strongly advice to choose to negotiate with your lender on your own to make your payments affordable, rather than trusting the government to save your home. We still tell you to apply for the government plan, but just make sure you don't count on actually getting it approved. You absolutely need Plan B and may be Plan C; and it would be in your best interest to find a professional to help explore all possible options.