Understanding The "Homeowner Affordability And Stability" Plan

The government's $75 billion plan to enable lenders modify their loan terms to help struggling home owners is a welcome step. It is not a mandatory for all lenders but does make loan modification more attractive to them. To be eligible for the benefits of this program, home owners have to meet certain conditions.

Any homeowner who wishes to be eligible for loan modification under this plan must meet the following conditions:

• Be the verified owner in occupation of the property - a single family home, condominium or cooperative.
• The house should not be either vacant or condemned.
• The loan to be modified must have been taken prior to January 1st, 2009.
• The outstanding loan amount must not exceed $729,750 (1-unit), $934,200 (2-units), $1,129,250 (3-units), $1,403,400 (4-units).
• The loan repayment must exceed 31% of the borrower's gross monthly pre tax income.
• The borrower's income or expenditure must have undergone a significant change to the extent that the current repayment is no longer financially viable.

The following conditions will also apply to any loan modifications under this plan:

• Delinquent borrowers are not eligible for loan modification under this plan.
• Borrowers in bankruptcy many apply for loan modification under this plan.
• Borrowers involved in litigation regarding their mortgages may apply under this plan without affecting the status of their litigation.
• Only one loan modification will be allowed under this plan.
• There is no minimum of maximum loan to value ratio for eligibility.