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Mortgage modification could help you avoid home foreclosure

Just two years ago, hundreds of thousands of individuals were in imminent danger of having their homes foreclosed upon, and existing government mortgage programs offered little help. To combat the wave of home foreclosures, the Obama administration rolled out a new mortgage modification program in the spring of 2009.

The goal of the loan modification program is to help homeowners avoid foreclosure by obtaining lower monthly mortgage payments.

The program can be especially helpful to Florida homeowners who - due to a deflated housing market - end up owing more than their home is actually worth - which means that if those homeowners run into debt problems, refinancing or selling the home will most likely not help their financial situation.

And, the problems related to the housing market are only expected to increase in Florida, and other states, where values decreased the most.

Nationwide, at the end of the last fiscal year, 22.5 percent of all homeowners - or 10.8 million people - owed more than their home's actual value, and economists predict that those numbers will inflate by another 5 to 10 percent by the middle of the year.

Fortunately, the new mortgage modification programs may offer help and partially offset these projected figures.

However, to be able to obtain a mortgage modification, most homeowners will be expected to submit a hardship letter that explains what events, such as divorce, unexpected medical bills or reduced income, caused a person to fall behind on mortgage payments.

Aside from these often times mandatory hardship letters, lenders will also want to see documentation to prove the facts of the letter. In some situations it may be confusing on what to write and what counts as proof. Luckily, help is available to those Florida homeowners who are looking to draft a hardship letter.

Source: Philly.com, "Federal mortgage aid programs at a glance," Janna Herron, 9 Feb 2011

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