Through the “Making Home Affordable” program, Obama offers help for homeowners and borrowers to modify their mortgage in order to save their homes from foreclosure. Most of the big mortgage lenders agreed to receive incentives from Obama’s program to offer loan modification to their borrowers. However, it has been a few months since this program was launched and foreclosures have still increased 35% this month compared to last month. In 2009 alone, America is going to see about 3.5million foreclosures.

As I wrote in my previous post “Mortgage Relief Ultimatum”, there are several reasons why the mortgage modification program has not been as successful to prevent foreclosures as originally predicted. One of the major reason is that lenders have not prepared themselves to handle the volume of application for mortgage modification. Many borrowers receive a respond only months after their initial inquiry.

If you are facing foreclosure and are currently looking for help to save your home, mortgage modification help is available through Obama’s Home Stimulus Package. Although we can not change the speed of service that the lenders are giving you, what you could do is prepare yourself and get all the necessary documents ready to make the application smooth and fast.

Here are the steps you need to take to prepare yourself and apply for a mortgage:

Step #1: Find out if you qualify

Call your mortgage lender. They will be able to tell you if you qualify for a mortgage modification. The general requirements are below, but it is best to check with your mortgage lender too.

• Your current payment must be over 31% of your gross monthly income; this includes insurance, taxes and any homeowner’s dues.
• Your mortgage must have been originated on or before January 1, 2009.
• The amount of your loan cannot exceed $729,750.
• The home has to be your primary residence.

Step #2: Prepare proof of hardship

One of the requirements to apply for a mortgage modification is hardship. Although you may already meet this requirement, you have to be able to prove that you have just experienced events beyond your control that caused a decrease in income or an increase in expenses which makes it impossible for you to make your house payment. Make sure you prepare proof of hardship before going to your lender to modify your mortgage. This will speed up your application process.

Step #3: Plan your modified mortgage payment

Your mortgage lender will ask you how you can comfortably pay your modified mortgage. Before they even get to ask you, make sure you already know what to answer them.

Write down your monthly household budget which includes all income and all expenses. Decide on a figure to repay your mortgage. If you have decided on this before even speaking to your lender you will have something to measure against your lender’s offer later on.

You can also plan to pay a down payment, forbearance or 3 months good faith payment. These terms will be lenient if you qualify. All figures and statements must be verified with all necessary documents.

Step #4: Paperwork

If you do qualify for the program, your mortgage lender will ask you to complete some paperwork that is mainly about your financial records. Try and complete these paperwork as soon as possible. When your done, check your work again for errors. The smallest error that you make can either cause your application to be rejected or the application process to slow down.

When you are ready to sent out your application and the paperwork, make a copy of everything first. The copy is for you as a record. When you ship your documentation through an overnight express, keep the tracking number. What you are sending is valuable documents and they need to be tracked.

Step #5: Stay on top of the mortgage company

Keep track of time and make sure you know that they are actually working on your application. 24 hours after you send the document, make sure you call them to see if they have received the documents. Ask them if there is any more information that you need to send them. Don’t assume everything is fine, always call them to see if they need more info from you.

You would want to have everything completed correctly because you can never reapply if you get rejected the first time. Also, make sure you do not leave out any data because that would cause your application to be placed to the side. That is why it is very important to regularly contact your mortgage lender to see if there are any data missing from you that you have not submitted. Mortgage lenders are currently overwhelmed with a big volume of loan modification application and you should never wait on them to contact you to complete all missing data.

Your preparation could be the difference in whether or not you manage to avoid foreclosure and save your home.

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