How to Apply for Debt Relief Stimulus

As part of its effort to ease the financial pressure on homeowners suffering from too much debt, the Obama administration in 2009 launched its Home Affordable Modification Program. This program, funded by the government's stimulus dollars, provides financial incentives to mortgage lenders and banks that modify the home loans of struggling homeowners. The goal is to leave homeowners with mortgage loan payments that they can afford. Qualifying for the stimulus program is a relatively simple process.

Instructions

1

Determine if you meet the basic qualifications of the Home Affordable Modification Program (See References). To qualify, the amount you owe on your first mortgage loan must be equal to or less than $729,750. You must be struggling to pay your mortgage payments, and have taken out your loan before Jan. 1, 2009. The payment on your first mortgage must be more than 31 percent of your gross monthly income.

2

Contact your mortgage lender at the phone number listed on your mortgage loan statement. Explain that you can no longer afford your monthly mortgage payment because of a financial hardship. This hardship might be a job loss, drop in your annual income or serious injury or illness. Request a loan modification.

3

Ask your lender if it is participating in the Home Affordable Modification Program. Most lenders are, but even if yours isn't, you might still qualify for a mortgage modification. Lenders can modify loans at their own discretion, even if they are not participating in the stimulus program.

4

Make copies of the financial paperwork that will prove to your lender that your gross monthly income has fallen while your monthly debt obligations have not. These papers include your recent credit card statements, other loan statements, savings and checking account statements, last two paychecks and most recent federal income tax return. Send these copies to your lender by mail, email or fax. Your lender will review these to determine the severity of your financial hardship.

5

Write a financial hardship letter that clearly explains why you cannot afford your mortgage loan payment. Also include your request for a loan modification that results in a lower monthly mortgage payment. Send this letter to your lender.

6

Agree to a specific loan modification if your lender approves your request. Your lender might decide to lower your interest rate, drop your principal balance or restructure the terms of your loan. Any of these moves will lower your monthly loan payment.