So, now that the details are coming out the question is “Will it help me?” The details are important to understand if the plan will help you.

Many people think that you have to be behind on your payments to qualify for assistance under the program; however, that is not the case. You can qualify for the debt restructuring programs if you are delinquent or if you are at risk of becoming delinquent. The program is designed to assist people in both situations so that they can avoid foreclosure and by restructuring their current mortgage they can come out in a healthy financial position and able to meet their obligations. Healthy financial situations for homeowners that are currently distressed is critical to turning around the housing market. As owners are able to save their homes from foreclosure this helps because it keeps the property from being owned by the bank. When banks own too many properties they have to sell them and get them off their books. This often results in properties being sold at liquidation values. It is in the best interest of the banks and the owners to work out a restructure of a failing mortgage. The assistance by the federal government through the stimulus package is providing a way for banks to offer the relief that is needed to stop the foreclosure landslide and start the turn around of the housing market which is critical to provide relief to distressed homeowners.

In order to participate in the program the owner must be prepared to provide evidence of financial hardship to qualify. In addition, certain financial information including pay stubs and tax returns are required. There are also some restrictions on the loan to value ratio – you can not owe more than 105 percent of the current value of your home to qualify for the program. This might be a limitation for homeowners in particularly stressed areas where values have plummeted from when they purchased the home. The value of homes are established by appraisers that review information on recent sales prices of homes as well as other factors to determine a fair market value. Because the market has been so down and is volatile it is a somewhat difficult proposition to accurate appraise property values. Generally speaking, the lender will want the appraisal performed by an appraiser selected by the lender. It is probably not a good idea to spend your money obtaining an appraisal without first contacting the lender.