Home Affordable Modification Program

[Ben Duq]

I was trying to find some information on the new Making Homes Affordable program and in particular the Modification portion and found the following in a nut shell:

1) Reduce your PITIA (principal, interest, taxes, insurance and association fees) to 31% of your gross income. The Treasury would work with the lenders to get to this level.
2) Pay for performance success payment of up to $1000 per year for 5 years that goes toward the principal.

To qualify you have to be current on your mortgage and your loan has to be a primary residence. The hardest part would be to prove the Reasonably Foreseeable/Imminent Default provision where you have to write or call to determine if your loan can/should be modified due to financial hardship etc.

I am not sure what the new loan will look like, i.e. will it be a 40 year loan, etc. the interest rates for the loan were outlined in what I read and will fall between 2% and the fully indexed amortizing original contract rate or the Freddie Mac primary mortgage market survey rate for a 30 year fixed rate.

Sounds like the bank may forgive some of your principal if they would choose to... I am not sure why they would other than the fact that the Govt would use tax dollars to make the banks whole (which is what they are doing now anyway).

Anyone here anything different or in addition to this bailout?