The housing market has been affected by the economic crisis, property values falling fast. Millions of people are unable to meet their mortgage payments, have lost their jobs or are suffering a reduction of their income. These circumstances are beyond their control but luckily, Obamas mortgage modification plan has appeared at the right moment.
Lenders are equally interested in joining the loan modification program, especially when they found out that they would be given cash incentives. The requirement for a lender is that he/she manages to successfully complete a loan modification, the homeowner respecting the payment schedule and meeting the new mortgage payments each month. The profits of the lender are sustained by these cash incentives, since a share of their earnings has disappeared due to the low interest rates and reduced payments given to homeowners taking part in the program.
The moment one applies for the loan modification program, the loan will be extended over a period that varies somewhere from five to forty years. Together with the lender, the borrower will negotiate other terms of the agreement as well, obtaining lower mortgage payments and an interest rate that is reduced depending on the borrowers financial difficulties. The mortgage rate is fixed, which is not the case with refinancing, where there is a high chance of being given an adjustable rate. The borrower does not default on the payments any longer and the lender recovers the debt, each part deriving a benefit.
Financial hardship, the loss of jobs and other negative consequences of the worldwide crisis have had a negative impact on homeowners. Struggling with the cost of living, barely managing to pay the mortgage rates and living with the constant threat of losing their homes, its no wonder that so many people are putting all their hopes into this loan modification program. As for lenders, they get a piece of the pie and recover money that would have been lost had the foreclosure action been started.
Instead of losing money due to falling property values, most lenders prefer to take part in Obamas mortgage modification plan. They agree to lower the interest rate and other similar conditions, provided that the homeowner keeps on paying the mortgage. The deal is sweetened by the promised cash incentives, bonuses of one thousand dollars offered when the homeowner pays on time. It seems that this plan is well-made and that borrowers are finally being given the opportunity to escape their impending debts.
Lenders are equally interested in joining the loan modification program, especially when they found out that they would be given cash incentives. The requirement for a lender is that he/she manages to successfully complete a loan modification, the homeowner respecting the payment schedule and meeting the new mortgage payments each month. The profits of the lender are sustained by these cash incentives, since a share of their earnings has disappeared due to the low interest rates and reduced payments given to homeowners taking part in the program.
The moment one applies for the loan modification program, the loan will be extended over a period that varies somewhere from five to forty years. Together with the lender, the borrower will negotiate other terms of the agreement as well, obtaining lower mortgage payments and an interest rate that is reduced depending on the borrowers financial difficulties. The mortgage rate is fixed, which is not the case with refinancing, where there is a high chance of being given an adjustable rate. The borrower does not default on the payments any longer and the lender recovers the debt, each part deriving a benefit.
Financial hardship, the loss of jobs and other negative consequences of the worldwide crisis have had a negative impact on homeowners. Struggling with the cost of living, barely managing to pay the mortgage rates and living with the constant threat of losing their homes, its no wonder that so many people are putting all their hopes into this loan modification program. As for lenders, they get a piece of the pie and recover money that would have been lost had the foreclosure action been started.
Instead of losing money due to falling property values, most lenders prefer to take part in Obamas mortgage modification plan. They agree to lower the interest rate and other similar conditions, provided that the homeowner keeps on paying the mortgage. The deal is sweetened by the promised cash incentives, bonuses of one thousand dollars offered when the homeowner pays on time. It seems that this plan is well-made and that borrowers are finally being given the opportunity to escape their impending debts.
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