Are There Any Restrictions On The MHA Plan?

President Obama's Making Home Affordable (MHA) was created to help homeowners get through the current economic crisis relatively unscathed with their homestead intact. But not everyone is eligible for a home loan modification, and there are restrictions in place.

Investors should not apply for a loan modification under the MHA Plan. In order to be approved, you must not only own the property, but reside in it as well. Mortgages on second homes, investment properties, commercial properties, or vacation homes are not eligible. A credit check will be done to make sure the applicant is living in the house.

In order to qualify for the loan modification program under the Making Home Affordable plan, the homeowner must adhere to these additional restrictions:

• The homeowner’s mortgage was created on or before January 1, 2009
• The homeowner can demonstrate that they are experiencing financial hardship or that financial hardship is an imminent danger. If so, you will need to provide sufficient proof of said financial distress.
• Your current mortgage payment (including taxes and insurance) must exceed 31 percent of your monthly gross income
• Your loan balance in question does not exceed $729,750 for a single-family home
• If you live in a multi-unit property, the restriction on the mortgage size is $934,200 for a two-unit home, $1.129 million for a three-unit home and $1.403 million for a four-unit home
• You must apply for the MHA Plan loan modification by December 31, 2012
• You are also required to present the following to your lender:
• Other documentation you will need includes:
• If you have a second mortgage on the house, present documentation
• Credit card account balances and all the monthly payments that are due
• Account balances and monthly payments due on car loans, student loans, or any other  liabilities

Lenders will use a "net present value" test to determine whether a loan modification is makes more sense form their perspective than proceeding with a foreclosure. The lender calculates how much it will cost to modify your mortgage to a debt-to-income ratio between 31 percent and 38 percent. The participating lenders are required to offer you a loan modification if the cost of modifying the loan is less than the cost of a foreclosure.

You should inquire for information with a home loan modification attorney or real estate attorney to become more knowledgable. or if you need more information, contact your lender or visit FinancialStability.gov, the government's official website for programs associated with the Making Home Affordable plan. The site provides a list of participating lenders.