Government Help to Stop Foreclosure - Does Such An Option Exist?

The Government announced the Homeowner Affordability and Stability Plan in February 2009. The plan can be difficult to understand because it's rather complex, but it does provide $75 billion in government assistance and it's specifically designed to help stop home foreclosures. The plan actually has two goals. The first is to help homeowners avoid immediate foreclosure, as well as the potential of a future foreclosure and second, it helps homeowners refinance their homes with lower interest rate loans, Osteo biflex and lower monthly payments. So the plan is designed to help homeowners who can't make monthly payments, and it is also designed for homeowners who can make monthly payments, but want to restructure their loans due to an equity imbalance or high interest rates.

If a homeowner qualifies for the first option they can reduce their monthly payment to a figure that's thirty one percent of their gross monthly income for as long as five years. The government will also throw in an additional incentive of $5,000 to reduce the amount of money the homeowner owes on that loan over that five year period. The lender actually reduces the interest on the existing loan in order to offer these lower monthly payments, and is rewarded extra incentives by the government for every loan modified using the mortgage modification plan.

In order to qualify for the plan the amount of money owned on the mortgage must be less than $729,750 without interest. The mortgage must be for the borrower's primary residence, so investors and speculators can't participate in the program. This part of the plan will disappear after December 2012.

The other option offered by the plan is refinancing the existing loan if the homeowner is still able to make monthly payments on time. People who have lost equity in their homes due to dropping real estate prices are eligible to participate. Normally in order to refinance a loan, a homeowner needs at least twenty percent equity in the home, but under the terms of the modification plan homeowners with no equity or negative equity may qualify to refinance.

If the home's value has dropped by more than five percent of the loan value, homeowners can not take advantage of the refinancing option, but if the homeowner has been making monthly payments within thirty days of the due date for the past twelve months, and has no equity or their equity is a negative five percent or less, they can take advantage of this refinancing option and avoid bankruptcy.

NOTE: By researching and comparing the best stop foreclosure companies in the market, you will determine the one that meets your very specific financial situation.

Hector Milla runs the Cheap Stop Foreclosure Loans website - where you can apply for mortgage modification or a quick loan to avoid foreclosure.