OBAMA HOME LOANS

Commonly referred to as simply “Obama Home Loans”, the Obama Home Loan Modification Program offers financial incentives to mortgage companies to modify your mortgage. This program is backed by Freddie Mac or Fannie Mae.

Your loan can be modified to 31% of your gross monthly income to reduce your housing debt payments (defined as first mortgage, real estate taxes, homeowners insurance and association/condo fees).

This can be done by lowering your interest rate to as low as 2% and extending the life of your mortgage to 40 years. Mortgage companies owning your second mortgage can voluntarily opt to reduce or eliminate your second mortgage.

This program applies to fixed and adjustable interest rate loans.

You are required to enter into a “trial period” of 3 to 4 months and provide proof of your income to the mortgage company. During this “trial period” you make the lower payment as it is initially determined by your mortgage company. The payment is based on the information you provide to the mortgage company. They will report to your credit bureaus that you’re paying on a partial payment agreement.

The Obama Home Loan may be right for you if:

• You’re having a hard time paying your mortgage because your interest rate went up
• Your income has fallen
• Your expenses now make it a hardship to afford your current house payment
• You want to save your house no matter what

You can do this program if you are current on your mortgage, or if you are already in foreclosure. You can also partake in this program if you are in bankruptcy or considering filing for bankruptcy.

One benefit of the Obama Home Loan is that you get to repay your loan with more affordable payments.

Another benefit is that you can get thousands of dollars taken off the balance of your mortgage if you stay current on payments.

It is still unknown how the program will effect your current credit score, or your ability to get a mortgage in the future.

Despite mortgage companies (and Freddie Mac and Fannie Mae) stating that this should not negatively impact your credit, IT WILL LOWER YOUR CREDIT SCORE for at least the “trial period” until your loan is modified and you’re paying under the modified mortgage (at which time you would stop making partial payments, and start making full payments under the modified loan).

Will you credit score go back up? It should, but the program is too new yet to fully know.

If you already have a modified mortgage loan, but are still struggling with debt and do not want to file for bankruptcy, Credit Solutions may be able to help. If you’re a Wisconsin resident, our bankruptcy lawyers can help you pay off your debt under Chapter 128.

With offices in Milwaukee and Chicago, Credit Solutions has helped thousands of people get the debt relief they need. We help guide you to the right answer, whether that’s with Obama Home Loans, filing for bankruptcy or identifying a different solution.

Set up your free consultation now – just send us your contact info & we’ll get right back to you.