The Making Home Affordable home loan modification is a great program that can help home owner facing a financial hardship to keep their homes and get back on their feet.  This modification program reduces the home mortgage to 31% of the owner’s gross income for a period of 5 years; after 5 years the mortgage will gradually return to a market (fixed) interest rate for the remainder of the loan.

So how do you qualify for this program?  You must meet a few qualifications…

1. Are you facing a significant financial hardship that is making it difficult to pay your mortgage obligation?
2. Is the mortgage on your primary residence?
3. Is your first mortgage less than $729,750?
4. Was your home mortgage created before January 1, 2009?
5. Is your mortgage payment (see below) greater than 31% of your gross monthly income?

If you can answer “YES” to all of these questions than you may qualify for the Making Home Affordable loan modification program.

You mortgage payment includes the principle and interest of your home loan.  It also includes the property taxes, hazard insurance, flood insurance, condominium association fees, and homeowner’s association fees (including any escrow payment shortage amounts subject to repayment plans).  However, the mortgage payment does not include mortgage insurance premium payments or payments to a 2nd mortgage or other junior/subordinate lien holders.

The gross monthly income includes all income before payroll deductions and taxes.  This includes all cash benefits recieved by the borrower.  All non-taxed income is considered net income and must be mulitplied by 1.25 to calculate the effective gross income.  The loan servicer may consider a non-borrower’s income if the information is voluntarily provided, can be verified and that income “has been, and reasonably can continue to be, relied upon to support the mortgage payment.”

So when you consider the total mortgage payment compared to the total gross income for the borrower (and possibly the household), if that number is bigger than 31% (.31) then you meet criteria number 5.

Remember, loan modification help is FREE. Beware of scams! For more information on the Making Home Affordable loan modification program check out their website at http://makinghomeaffordable.gov.

For more information on Foreclosure Prevention visit www.hud.gov or www.CommunityActionUC.org. To find a FREE HUD-approved housing counselor to explore your options call 1-800-569-4287 (TDD 1-800-877-8339).