US mortgage industry has never witness a worse scenario with more than 1 million mortgage debtors looking for mortgage modification process to prevent property foreclosures. Decreasing value of US homes and stricter guidelines by investors have brought many homeowners across the country in a no go situation. It has become extremely difficult for the borrowers to either refinance or sell their homes.

The federal government has therefore adopted a streamline mortgage modification plan which is the most cost effective measure to help the homeowners from loosing their home.

However to qualify for mortgage modification program one needs to fulfill all criteria issued by the lenders such as the guidelines issued for debt ratio which is representative of the percentage of borrowers monthly income that is spent on mortgage premium. The usual debt ratio asked by the investors lie between 35-45%. The borrower must also write a convincing hardship letter and provide income proof that supports the fact that the borrower will be able to repay the lower mortgage rates in a timely manner. It is essential to read the guidelines of investors carefully before filling out mortgage modification application.

Streamlined Modification Program (SMP) was developed by US government in association with Department of Treasury, Member of HOPE now Alliance, Federal Housing Finance Agency and Freddie Mac to speed up the mortgage modification process. SMP has become effective starting December 15, 2008 and to qualify for mortgage modification:

1. The loan should have been taken before 1st January 2009 and the loan amount should be less than $729,500. 2. The borrower has missed at least three mortgage payments. 3. Loan had been secured for the primary property of the home owner where they are staying. 4. 90% of mark- to market LTV. 5. The property for which the loan is approved is not vacant, in a state of disrepair or condemned. 6. The person is unwell or dead, lost his job due to recession, separated or divorces, lost home due to natural disaster or is the member of armed forces.

A mortgage modification helps to bring down the interest rate in increments of .125% with the value not going below 3% and also extends the mortgage loan term to almost 480 months. So check if you qualify for mortgage modifications and apply for it to get tremendous benefits.

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