If your income has declined or your mortgage payment has increased to more than 31% of your gross income (all income before taxes), you also generally meet the guidelines to receive a temporary, five-year reduction in mortgage payment , as well as significant incentives for successful participation in the program.
To be clear and avoid scams, there are no closing costs or fees of any kind for participating in the mortgage modification program or the refinance program for Fannie and Freddie Mae mortgages. You should, to the extent possible deal directly with your lender and you should be aware of and avoid any kind of scheme where a broker might try to charge you fees to participate in this program.
For example, among other incentives, homeowners qualifying for and participating in the mortgage modification program qualify for an initial cash payment of $1500, as well as a $1,000 reduction applied to the loan principle for five years. For more exact breakdown of the incentives available to borrowers, lenders and servicers under the Plan, please see my prior article detailing the entire plan. For the purpose of this article, I will be focus primarily on the credit counseling requirements.
How the Credit Counseling Will Work
Credit counseling agencies nationwide must certify themselves as HUD counselors and can then provide the required counseling under the Mortgage Modification Plan. The Treasury has issued some general information to credit counselors to begin implementation of the Plan. The following is a breakdown of the information provided to credit counselors thus far. For example, the Treasury advises credit counselors that if they are already working on a modification plan to benefit a borrower, they must now first consider whether modification under the Plan may be more beneficial to the homeowner.
When a credit counselor determines that a homeowner does not qualify for a mortgage modification under the Plan, the counseling agency is supposed to discuss all loss mitigation options, including loan modification scenarios outside the Plan and opportunities to refinance or access to available local resources such as rescue grants and loans. If it is impossible to work out a deal to keep the homeowner in the home, the counseling agency should discuss short sales and deeds in lieu of foreclosure as ways to help a borrower transition to more affordable housing.
Treasury advises credit counselors that one of the important components of the Making Home Affordable program is community stabilization. Treasury views short sales and deeds in lieu of foreclosure as options that minimize the impact of vacant and abandoned propertied on communities. Counseling agencies are presumably required to inform participating loan servicers that they could be eligible for an incentive of $500 and can make reimbursable payment of up to $1000 to extinguish other liens. Borrowers in this situation are eligible for a payment of $1500 in relocation expenses in order to effectuate short sales and deeds-in-lieu of foreclosure.
Although all delinquent borrowers are encouraged to seek the advice of a HUD-approved counselor, only borrowers with a back-end debt-to-income ratio at or above 55% must certify that they will participate in counseling as a condition of a modification under the Making Home Affordable Program.
If you need more informaiton go to making home affordable, The HUD Credit-Counseling Requirement of the "Making Home Affordable" Plan, obama home affordable.
What You Need To Know:Making Home Affordable Refin 