Increasingly, I’ve been getting calls and emails from homeowners who aren’t yet behind on their mortgages, but think they will be soon. For a while – too long – lenders refused to talk to borrowers unless they were a few months behind. But President Obama’s Making Home Affordable plan should change things.
Under that plan – which you can read about at www.makinghomeaffordable.gov – you do NOT have to be behind on your mortgage payments to be eligible for a loan modification – but you do have to be at risk of imminent default. That means either your mortgage payment has increased and you can no longer afford it, your income has been reduced pretty significantly, or you’re experiencing some other kind of hardship – a medical emergency, for example. If this is you, you should contact your mortgage servicer – again – and let them know what’s going on right away, keeping in mind that you’re going to need to document your income and expenses and provide evidence of your change in financial circumstances. Tell them that you think you qualify for a loan modification under the Making Home Affordable plan. They will then be able to run the numbers for you.
The exact qualifications for the Making Home Affordable Modification are:
You must be an owner-occupant in a one to four unit property,
You must have an unpaid principal balance that is equal to or less than $729,750 for one unit properties (there is a higher limit for two to four unit properties – consult your servicer)
Your loan originated on or before January 1, 2009,
Your mortgage payment (including taxes, insurance, and home owners association dues) is more than 31% of your gross (pre-tax) monthly income
Your mortgage payment is not affordable, perhaps because of a change in income or payment amount.