Real estate experts in Illinois are reaching out to delinquent homeowners who want to save their houses from REO property listing.

Their efforts to help delinquent homeowners are based on President Barack Obama’s housing market recovery program, Making Home Affordable. The program aims to help more than 9 million troubled homeowners in the country with home loan modification and refinancing.

To qualify for the federal government’s home loan modification program, a distressed borrower must be an occupant-owner of a property with one to four units. The distressed borrower should have taken out the loan not later than January 1 of this year.

The troubled loan must have a due principal balance of not over $729,750 for a one-unit property. Higher amounts are required for multiple units. Additionally, the mortgage payment should be over 31 percent of the trouble borrower’s gross monthly income and payments are not affordable due to changes in expenses or income.

Meanwhile, Governor Pat Quinn has announced a grace period of 90 days for homeowners who are at risk of foreclosures to work with housing counselors and their lenders to create ways to save their homes from REO property listing.

On the other, the Realtor Association of Southwestern Illinois has advised distressed homeowners who are planning to seek mortgage modifications to be prepared with the documents needed, such as information on the current financial situation, account balances and assets. Of utmost importance is a letter from troubled homeowners explaining why their current mortgage is not affordable.

Association President Dan Tatum pointed out that the foreclosure crisis has a widespread impact, not just on homeowners but also to neighborhoods and communities. He added that it is in the best interest of everyone to ensure that people remain in their homes. He said that for those who are behind on their mortgage payments, there are various options to help make their mortgage manageable.

However, the association cautioned distressed homeowners about some fraudulent foreclosure prevention schemes. It pointed out that some unscrupulous individuals would offer to act as intermediaries between distressed homeowners and lenders. They will entice vulnerable homeowners with their speeches and tell them that they are allowed to accept mortgage payments on behalf of the lenders.

Al Suguitan, executive director of Greater Gateway Association of Realtors, said that it is of utmost importance that distressed homeowners who want to save their homes from REO property listing, know that there are legal options to prevent foreclosures.

Officials of the Wayne County Common Pleas Court in Ohio are urging homeowners who are at risk of having their homes end up in lists of bank foreclosures to fill out a questionnaire that will help determine their plans for the property. In addition, the said form can be used to get these distressed homeowners to enter a mediation program that will help them avoid foreclosure.

If these troubled homeowners decide to enter the mediation program, it would allow them to keep their homes via mortgage renegotiation. The said mediation program is offered for free but the parties involved should enter voluntarily (creditor and debtor) so that they could come up with a solution to the mortgage default and start the renegotiation of the loan term.

According to magistrate Corey Spitler, it is vital for the parties to communicate. Most troubled homeowners ignore their problems until it is too late and their homes end up in the lists of bank foreclosures.

The mediation program to prevent foreclosure has been planned for many months but started just last week. Aside from Wayne County, the counties of Summit, Franklin and Starck have also started similar mediation programs in order to reduce the number of homes in lists of bank foreclosures.

Distressed homeowners who receive notices of defaults will be required to fill out a particular form containing questions regarding their plans with their homes. Once filled, the questionnaire will be given back to the courts and it will be then determined if mediation is possible or the foreclosure process will move forward.

For those residents who receive notices that they can enter the mediation program, their cases will be turned over to the county magistrate who will facilitate the mediation process for both the debtors and creditors. Judge Robert brown believes that it would not hurt the parties involved to have the case looked over.

Obviously, the primary goal of the mediation program is for the homeowners to find a realistic solution to their mortgage problems in order for them to avoid ending up in lists of bank foreclosures.

Details of President Barack Obama’s $75 billion program to reduce foreclosure listings have been released by the Treasury Department. First declared on February 18, Obama’s program aims to prevent up to 9 million homes from being included in foreclosure listings.

The program, now called Making Home Affordable Program, offers two components for troubled homeowners: one for mortgages owned by Freddie Mac and Fannie Mae and the other for mortgages that need to be modified by other mortgage lenders. The first one aims to help about 5 million homeowners through loan refinancing by June 2010 while the second one aims to help about 4 million homeowners through loan modification by December 2012.

To encourage loan modifications, the program will give cash incentives to mortgage lenders for every borrower they save from being included in foreclosure listings. It will also reward borrowers who keep up with their monthly payments for 5 years from the time their loans were modified.

In response to critics that say the program abets irresponsible borrowers, Treasury officials reiterated the program will help only borrowers threatened by foreclosure listings because of the economic downturn or by factors beyond their control. Borrowers who knowingly took out loans they could not pay are not eligible to apply for modification or restructuring.

Administration officials are also spreading the concept of shared responsibility, according to Heather Fernandez, top marketing executive at real estate business search engine Trulia. They are informing American taxpayers they need to help in reducing the number of homes in foreclosure listings to preserve the price level of their properties and ultimately stabilize the housing market and the national economy.

Peter Buchsbaum, head of Arlington Capital Mortgage Corp.’s Jenkintown branch, said the success of Obama’s program will depend on the level of cooperation by the mortgage lenders. Freddie Mac and Fannie Mae said they would extend their foreclosure moratoriums while most private banks such as Wells Fargo are set to end their moratoriums in the middle of March.

The overwhelming number of applicants is also creating a problem for lenders, according to Bank of America spokesperson Rick Simon. Additionally, mortgages have been securitized into several packages and sold to different investors. This requires preparations of documents showing investors loan modification is a better option for their investments than letting the mortgages get added to foreclosure listings.