President Obama’s housing plan supports loan modification as a solution to real estate slowdown. With representation by companies like 1st Loan Modification of America, borrowers can negotiate terms to afford make mortgage payments more affordable. Here are four things that 1st Loan Modification of America can illuminate about President Obama’s loan modification program.

1. The 31% Line: The administration’s plan, explains 1st Loan Modification of America, requires participating loan servicers either to reduce a borrower’s principal or monthly payments to no more than 38% of the borrower’s gross monthly income, with the government chipping in to bring payments down to not more than 31%.

2. Financial Hardship: 1st Loan Modification of America partners with the target group for the administration’s strategy: responsible homeowners caught in recession and at risk of default. To participate, 1st Loan Modification of America’s homeowners must verify occupancy status and outstanding principal balances through documentation, sign an affidavit of financial hardship, and verify income.

3. Net Present Value Test: To determine if a particular mortgage will be modified, 1st Loan Modification of America says that a servicer will perform a net present value test. 1st Loan Modification of America details that this compares the anticipated cash flow generated by the loan, if modified, with the anticipated cash flow generated, if not. If the modified loan is expected to produce more, the servicer is to restructure the loan.

4. Cash Incentives: To encourage participation, 1st Loan Modification of America reports that servicers are paid $1,000 for each modification and an additional $1,000 payout each year for three years, as long as the borrower makes payments. 1st Loan Modification of America’s clients, meanwhile, benefit from up to $1,000 off the principal of their loans each year for as many as five years if they make payments on time.

According to the experience of 1st Loan Modification of America, foreclosures take place less frequently due to the total value of the home mortgage than to a homeowner’s inability to meet monthly payments. 1st Loan Modification of America helps to them get back on track.

For more information about loan modification for a mortgage, contact 1st Loan Modification of America, LLC at modifications@1stloanmodificationnow.com.