Time is of the Essence | Loan Modification Part 8

Timelines for federal aid

You should have a pretty good idea by now of whether you are eligible for Loan Modification or Refinancing through the federal foreclosure prevention plan. So, do you need to start filling out your paperwork right now?

In short, the best answer is “yes.” If you are struggling with your mortgage, the sooner you get help, the better.

For those not struggling … yet

It’s best to apply for aid as soon as possible because there is a finite amount available. However, for people who run into trouble in the near future, the foreclosure prevention plan will be around to help for a little while.

For those who will apply for refinancing on their personal loans through the government’s program, a very little while.

Refinancing

Just to refresh, the refinancing part of the foreclosure prevention plan is for homeowners who are not behind on payments. Only homeowners with loans through Fannie Mae and Freddie Mac can take advantage of this part of the program.

Homeowners must show proof of hardship and have mortgage payments higher than 31 percent of their income. If they qualify, their mortgages can be refinanced to bring payments down to that level.

Deadline

Homeowners who want to take advantage of the refinancing plan have until July of 2010 to apply. So, if you lose your job or run into other hardship over the next 15 months, you can still apply for the federal refinancing program.

Loan Modification

The feds are allowing a bit more time for applications to the loan modification portion of the program. Loan modification is only for people who are three months or more behind on their mortgage.

This program is designed to more directly prevent foreclosures by helping homeowners who are already at risk of losing their homes.

Planning for the future

It seems the government anticipates that homeowners could continue to need this program for a while. Homeowners who already have delinquent mortgages and want to apply for federal loan modification have until 2012.