If you are ready to decide what to do with your current dicey mortgage, then you can discuss your situation with the HAMP expert who will suggest you on federal government’s mortgage modification program. The program is designed to help the homeowners who are not able to keep with their current mortgage simply because they have lost their job in the present sluggish economy. You can either go for the services of HAMP expert, or you can also go for the online mortgage modification software that will help you send your loan modification application to the lender so that it can be considered for HAMP.

The Pros: The basic idea surrounding the loan modification is that your lender brokers a new loan agreement on behalf of the government. The lender takes the existing loan amount and compares it to your verifiable income. First, the lender lowers the interest rate on the current mortgage to get you mortgage payment within 31% of your monthly income. They can lower the rate down to as low as 2%, to try and get your monthly payment to the 31% mark. Sounds great right, well let me finish.

Conversely, banks have stepped up efforts recently to help modify mortgages in-house, rather than go through the HAMP program. Banks are doing more and more modification themselves because they say that the requirements for a HAMP modification make it too difficult for many troubled borrowers to permanently qualify. Once a borrower is labeled as ineligible for a HAMP modification, banks will often workout a modification with the borrowers. Because of bank efforts they have modified around 4 times more mortgages than HAMP has since spring 2009.

The Cons: Once you have signed up for the government mortgage modification you will be required to pay the government 50% of any equity that is acquired on the value of the property. For example, say in 5 years you decide to sale the house and you have $80,000 in equity. You sale the home, and make $80,000 the government will take $40,000 of that equity at the time of sale. Next say that the loan modification lowered your principal balance by $60,000 you have to show that money as income and will have to pay taxes on it.

Still, the government mortgage modification program has helped over half a million borrowers with troubled mortgages. Many of these borrowers could not have received a mortgage modification without the program. In that sense, HAMP has not been a complete failure.

Learn more about Obama Mortgage Relief Plan Qualifications.