Obama's Home Stimulus Package earmarks 75 Billion dollars in funding to assist homeowners facing foreclosure due to financial hardship situations. Under this plan, approved lenders receive financial incentives to grant loan modifications that reduce borrowers' payments to less than 31% of their gross monthly income. This is accomplished through one or all of several tools at their disposal through this federal plan: interest rate reduction, lengthened loan terms, waiver of late fees, and even forgiveness of principal.

The loan modifications can only be done on property that is a primary dwelling, has a maximum loan amount of $729,750, and has a loan written on or before January 1, 2009.

To apply, a homeowner must have a mortgage payment, including taxes, insurance and homeowner dues, that is more than 31% of their gross monthly income and be experiencing financial hardship. You might wonder what qualifies as financial hardship.

- Circumstances over which a borrower has no control have occurred.
- Either their income has decreased or their expenses have increased.
- Marital separation or divorce, job loss, medical bills, military service, or death of a spouse or co-payer of the mortgage has happened.
- The mortgage must either already be in arrears and in danger of foreclosure, or the difficulty of meeting the monthly payment makes it a probable event in the immediate future.
- The homeowner seeking help through Obama's Home Stimulus Package must provide a full disclosure of their current financial situation, detailing incomes, expenses, both past and present, that play a part in the difficulties.
- All Facts and figures must be fully documented with the appropriate paperwork.

Besides qualifying as having experienced a valid hardship, a homeowner seeking assistance through the stimulus bill must also be able to present a budget explaining how the new, modified monthly payment will be quite "workable" for them. They must also convincingly relate their commitment and dependability to faithfully meet their mortgage obligation in the future.

If you think you meet the qualifications to apply, it is best to compile your financial paperwork before contacting your lender. This allows you to fine-tune your application to meet the federal guidelines and give you more confidence to present your case in a convincing manner to your lender in the required telephone interview.