Have you been waiting for the new mortgage restructuring program promised by the Obama administration? Wait no longer. You can apply for loan restructuring right now! Call your loan servicer, the company that sends you your monthly mortgage bill. You may have to call more than once as phone lines are likely to be jammed.

Under the new guidelines;

• The government will pay lenders and borrowers generous incentives to participate in the program.
• Eligible borrowers must be screened for financial hardship
• Lenders will have to document current income, assets and expenses to verify that borrowers are struggling to meet their mortgage payments.
• For borrowers deemed at risk of imminent default, lenders will apply a net present value test to determine whether the loan is worth modifying under the program.
• Under the program, lenders will have to reduce monthly payments on mortgages to no greater than 38% of a borrower’s income. The government will then match further reductions in monthly payments dollar-for dollar from 38% down to 31% debt-to-income ratio for the borrower.
• After five years, “the interest rate can be gradually stepped-up by 1% per year to the conforming loan survey rate in place at the time of the modification,” Treasury Secretary Timothy Geithner said in a written statement released Wednesday.
• In cases where loans fail the net present value test, mortgage insurers have agreed to pay partial claims in order to help the borrower avoid foreclosure, Mr. Geithner said.
• Under the program, servicers will receive an upfront fee of $1,000 for each eligible modification meeting guidelines established under this initiative. Servicers will also receive “pay for success” fees, as long as the borrower is successful at staying in the program, of $1,000 each year for three years, said Mr. Geithner.
• In addition, the written statement said the plan will include an incentive payment of $1,500 to mortgage holders and $500 for servicers for modifications made while a borrower at risk of imminent default is still current on their payments. As long as the borrower stays current on his or her payments, he or she can get up to $1,000 each year for five years.

Source: Wall Street Journal – Obama Administration Launches Housing Plan

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