Criteria for Home Mortgage Loan Modifications

04/14/09

The rate of foreclosures on home mortgage loans continued to go up last month. The Mortgage Bankers Association started tracking home mortgage foreclosure and delinquency data in the early 1970s and the current rate is higher than any time since then. Unemployment was at 8.1 percent in February. Home values continue to decrease in many areas of the country. Although the government recently unveiled a huge housing aid package, consumers appear to be reluctant to make any real estate purchases. The President vows to lend a hand to responsible homeowners before they are in danger of losing their homes.

Some homeowners who took on a mortgage that was well within their means and have made all their payments on time, are angered that taxpayers have to pick up the tab for irresponsible borrowers who bought more than they could afford. The Obama plan, which designates $75 billion to help ease mortgage payments for troubled consumers, claims to help all homeowners in the long run. If foreclosures in a certain area continue to go up, values for all homes there will go down. Communities will deteriorate, as more and more people lose their homes. Every tax dollar is helping all homeowners prevent their communities from falling apart.

To qualify for a home mortgage modification under the housing aid package, a homeowner must meet certain criteria. A home owner must own the property and occupy it as a primary residence. The home mortgage must have been established before the beginning of 2009. The home owner must have experienced some event that led to financial loss, such as being laid off or a decrease in pay that will prevent him from making his payments. Lastly, it must be determined that the current home mortgage bills each month are greater than 31 percent of monthly earnings. The housing aid plan does not mean that no homeowner will go into foreclosure. Those who will clearly not be able to make their home mortgage payments, in spite of loan modifications, may have to go into foreclosure. History will be the judge of whether this new housing aid package will give the housing sector relief from home mortgage foreclosure and delinquency rates. Responsible homeowners who have and will continue to pay their bills on time will be aiding some irresponsible consumers, but many analysts fear that doing nothing would be more catastrophic for the already ailing housing market.