For homeowners finding to make sense of the Obama administrations new Loan Modification Programs, the program can be basically broken down into two sections. One part is for homeowners facing foreclosure due to missed payments and are at risk of defaulting on their loans. For them, the government will give the lender financial incentives to make a loan modification to the existing mortgage (known as a mortgage loan modification), reducing the monthly payments so as homeowner can stay current on the loan and keep their home.
The other part is for homeowners who are keeping up with their mortgage payments but cannot refinance or get a loan modification with their lender because the value of their home has fallen below the number of the mortgage.
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For these "under water" homeowners, the rescue plan will help refinance the mortgage to lower the monthly payments. There are several restrictions, however, so relatively few homeowners in this class will easily qualify. That is the easy explanation. But both plans have a lot of inspiring parts, so here is what you need to know if you want to take benefit of them.
