whether they are getting lower monthly payments or not. The housing plan of Obama administration encourages the lenders for mortgage modification of homeowners who cannot afford their monthly payments because of their currently hardship. The hardship definition is to lose which include income lost, increasing expenses, illness and many other reasons of being at the risk of default. If someone wants to get the modification to prevent form the foreclosure, then he has to immediately submit financial documents which include paycheck receipts and an income tax form. The requirement of new loan modification is the latest update in the Obama plan of home foreclosure reduction.
HAMP- the Home Affordable Modification Program is designed to help those homeowners who are not able to make their mortgage payments. If homeowners qualify for the list of eligibility requirements, then they can have their mortgages which are modified with lower monthly payments. Each of the Home affordable Modification Program is processed in two stages; in the first stage there is the trail modification which usually remains for three months. During these months if the homeowner makes his payments on time, then he qualifies for all the eligibility rules to get the permanent modification. One of the eligibility for HAMP is income. To qualify for the permanent modification the borrower neither can earn too much nor too little, because too much income with modification is unnecessary and not acceptable for the modification because modification should always be affordable. On the other side borrower with too little income cannot afford the home loan even with the modification.
Recently a lot of servicers give trial modifications to the borrowers on what they say on the phone call. Many of the borrowers report their income inaccurate on the phone call. They say that they earn less than what they actually earn. By this they get trial modification on the wrong basis and later on when they send their paycheck receipts and other proof of income, it clarifies that make many wrong things to be eligible for the permanent modification.
Financial proof is requiring in modification:-
Few of the servicers ask for income documentation as a proof. But later on federal government wants all the servicers to require this proof for modification. By the 1st June mortgage servicers will have to get information from the borrowers before giving then trial modification. As well as the borrowers will sign as IRS form which can be 4506-T or 4506T-EZ according to which the mortgage servicer will be responsible to receive a transcript of most recent returnable tax of federal. At the end borrower will sign a document in which he will officially request a mortgage modification and will explain the hardship which makes his loan unaffordable. In the recent months the Treasury department has issued the report card of mortgage servicers which show that which mortgage servicers are giving a lot of loan modes and which are giving few. But these report cards did not differentiate between the borrowers that who get the trial modification on the basis of all paperwork and who get on the phone call. But some of the companies like American Home Mortgage Servicing always require the paperwork before loan modification and their report cards show that they have only few borrowers for the trail modifications. The new policy of government is an acknowledgement and a appraise that to get the documentation before loan modification is the best policy.
Obligations and rights of borrower:-
The borrowers who are looking for their modified mortgage are preferred to work with the lender with a good faith. This means that all expenses and income should be reported to lender honestly and accurately. If the borrowers reach on such a point where they are full confident that they would not be able to make the payments even after the loan modifications then they need to accept that at this time mortgage is out of their reach. This is the advantageous for borrowers because they will get help and tips from the lender they never have and lender will guide them to get the better financial position. If they mislead the lender and get into the foreclosure then they will have very few chances to get another modification. Loan modifications are time-consuming and as well as costly for the lender and over all lenders are more responsive to those borrowers who have full documentation and cooperative with lender. There are also other options for borrowers like they can faithfully sell their property. At the time closing a mortgage borrowers sign a form which is called a 4506-T. according to this form borrowers pay federal tax, and if he does not pay he will be committed fraud and will be disqualify to continue the process. And if the borrowers provide false documentation the charges will be implemented against the borrowers.
Obligations and rights of lender:-
Lenders have right to expect from the borrowers that they would be in good faith during the loan modification process. Borrowers should be as truthful as their lender are expecting from them. Like borrowers lenders also need to work with good faith an should give correct and timely information and they should understand that on the other side of the phone call there is a person who is on the end point of losing his property and home.