Mortgage Plan: Who Actually Qualifies

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The new mortgage plan is out there, fresh out the box. The new loan mortgage plan has been designed to help more people dig themselves out the current crisis. There are actually some clever incentives for those who try and work with their mortgage even if it is upside down. So here are the two question we are all asking: What does this “new mortgage plan” offer? And who qualifies?

The mortgage plan has two main objectives:

1) To help people who are going to foreclose on their mortgage because they are late in their mortgage payments. This demographic is the priority of the plan with good reason. The avalanche in home foreclosures is affecting the whole housing and construction industry besides these are the families hardest hit by the housing crisis. The mortgage plan will help these homeowners to modify their mortgages and make them affordable.

2) The second objective is to help with the home mortgages of home owners that can’t refinance their home and take advantage of the current lower interest rates because the value of their home has dropped so much it is worth less than their mortgage. The new mortgage “deal” will help these home mortgage owners to refinance their homes with lower interest rates. Unfortunately the restrictions on this type of home mortgage are so high the number of homeowners that will benefit from it will be significantly lower.

In a nutshell the two-pronged working plan is to save the mortgages or homeowners that are behind in their payments and that would otherwise lose their homes with a mortgage modification that would reduce their monthly payments and make them affordable. The second prong aims to open under water mortgages that are worth more than the value of the home to refinancing with the current lower interest rates.

Who qualifies?

The devil is as usual in the detail but here are the main points homeowners must meet to qualify:

1) The mortgage must have been secured before January the first 2009.

2) The primary mortgage must be less than $729,500. This figure has actually been revise a few times to include the mortgages of homeowners in expensive states and areas.

3) The homeowner must live in the house he is requesting aid for. This mortgage plan is not there to save investments but family homes.

4) The homeowner must sign a financial hardship statement that documents his inability to pay his mortgage.

5) Tax returns and pay stubs must be fully documented.

6) If the homeowner pays over 55% of his income on debts he must sign up for counseling. I think this is probably one of the best ideas this mortgage plan sets out as so much of the debt trouble we get into is due to bad financial habits that can be un-learned with some practical help.

As you will have noticed the requirements on the new deal have been relaxed and more mortgage homeowners should be able to benefit, but will it be enough?