The United States government estimates that there are more than eight million mortgages currently at risk for default. A majority of these mortgages are what is now known as “sub-prime”. This had nothing to do with their rates, but with the qualifications of the borrower.

The Mortgage Crisis
Over the past few decades the financial industry had access to billions of dollars of easy and cheap credit and such money was used to fund mortgages that required no documentation on the part of the borrowers.

What all of this has added up to is billions of dollars in mortgages that are now in default or foreclosure. This has taxed the banking system’s reserves so badly that credit is considered to be “frozen” to a great extent.

To rectify this problem, the current presidential administration has created several mortgage loan modification and borrowing programs. While it is referred to as the “stimulus” plan in general, the housing stimulus plans include $75 billion to be dedicated to the prevention of foreclosures, though there has been a $275 billion commitment all together.

Current Qualifications for Mortgage Loan Modification
The qualifications for loan modifications are provided below, though each individual situation will be analyzed by the lender and it is recommended that homeowners seek professional advice before beginning any discussion of a loan/mortgage modification.

With that being said, the following homeowners are eligible for financial assistance on home mortgages:

• Loans originated on or before January 1, 2009.
• First-lien loans on owner-occupied properties with unpaid principal balance up to $729,750. Higher limits allowed for owner-occupied properties with 2-4 units.
• All borrowers must fully document income, including signed IRS 4506-T, two most recent pay stubs, and most recent tax return, and must sign an affidavit of financial hardship.
• Property owner occupancy status must be verifiable through borrower credit report and other documentation; no investor-owned, vacant, or condemned properties qualify.
• The mortgage lender/servicer must be eligible to receive federal incentives to modify mortgages of at risk borrowers who have not yet missed payments (The mortgage servicer determines whether or not the borrower is at imminent risk of default.)
• Modifications must be made from now until December 31, 2012; loans can be modified only once under the program.

Though many borrowers are still looking into refinancing their original loans, it is only through the government funded options that most borrowers can catch up on any back or overdue payments as well as get a loan especially designed to meet their current financial needs.

As always, thanks for reading this post and if you enjoyed it be sure to comment below. Also, check out our FREE 2009 Loan Modification Guide: Saving Your Home From Foreclosure.