Loan Modification Program - Can You Actually Avoid Foreclosure With Barack Obama's Help?

Loan Modification Programs have been in place to stop mortgage foreclosure in America for a number of years now. However, it wasn't until Wednesday 4th March 2009, that the Barack Obama administration finally brought these programs into the 21st century.

There are a few things you should probably know first:-

- Once the foreclosure process has started, the courts, not your lender, are the only institution that have the power to evict a homeowner.

- You can only be evicted if you have defaulted on your mortgage repayments

- By law your lender cannot make any profit from a sale of a property during this process. So in reality, it's in your bank's best interest to receive some money from you and not be forced into trying to sell a property.

So how can these Loan Modification Programs help?

There are a number of different benefits these programs can offer. The following criteria may be of most interest to you:-

- The government can reduce your outgoings significantly by ensuring that your monthly mortgage payment is no more than 31% of your monthly salary. This may involve lowering your interest rate or extending the term of your loan or both.

- Over a period of 5 years, as long as you make your new lower repayments on time, the government will knock $1000 off your mortgage balance each year.

This is all well and good, but how much is this going to cost initially?

You have options to contact specific companies, attorneys and there are even specialist Loan Modification Foreclosure Prevention professionals, but it doesn't come cheap. Reports have been made that many people have reduced their monthly mortgage repayments by over $500 a month for the next 5 years. However, the initial fees and costs involved can be anywhere from $1500 - $5000. My guess is if you had a spare $5000, you wouldn't be in the situation you are in now!