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Faced with foreclosure, homeowners also face roadblocks with Obama's Making Home Affordable Loan Modification Program
The creation and release of the government program, Home Affordable Modification Program in March of 2009, also known as Making Home Affordable caused many homeowners to breath a sigh of relief. Sadly, they found the respite was temporary, due to considerable difficulties in completing the loan modification process.
Borrowers have complained that the process can take months, and the process seems to be riddled with roadblocks and delays. The problems are numerous, including misinformation, administrative hassles, and supposedly flawed paperwork. Homeowners in trouble, seeking help, have only felt rejected and demoralized.
Mortgage service providers indicate that inconsistencies abound in the program, as well as miscommunication between borrowers and lenders.
Making Home Affordable was touted by the Obama Administration as a way for millions of Americans at risk for home foreclosure to modify their current loan to reduce monthly payments. This was to be achieved a variety of techniques such as reduced interest rates as low as 2%, extension of loan repayment periods up to 40 years, as well as interest rate deferral and principal forbearance.
The new lower payment (including taxes, insurance, and other fees) cannot exceed 31% of the borrowers gross (that is, before-tax) income. The borrower then enters a three-month trial modification phase, to see if they can make the new lowered payment consistently on time and if full. If so, they are then eligible for a permanent modification of their loan terms.
American Incomes Dropping as Unemployment Rises
As of October 2009, over 650,000 borrowers were in the trial phase of the modification process. Of that number, approximately 5% have gone on to be extended permanent modification. Over time, that number is expected to rise. Making Home Affordable predicts anywhere from 3 to 4 million Americans will directly benefit from the program.
However, that number may need to be adjusted to include growing numbers of Americans facing job loss, and therefore, declines in income. Originally, the problem facing borrowers was thought to be poorly structured loans issued to subprime borrowers that needed adjustment. Today, increasing numbers of prime borrowers who have lost their jobs and now cannot afford to make their loan payments is compounding the mortgage crisis.
According to the Congressional Oversight Panel’s reports this program sadly is already outdated. The Congressional Oversight Panel defends the now-outdated program by saying it was not intended to prevent foreclosures cause by job loss.






"We were struggling every month to try to pay our mortgage and kept falling further and further behind on everything else. The place was a mess because we didn't have the money to fix it up, but we didn't think we could sell it because of the state of disrepair. My wife and I were like hamsters on a wheel, just trying to get through each day to make payments on a house we grew to dislike. But we knew that foreclosure would destroy our credit, so we held on. Then we found out about 1st Foreclosure Prevention. They were able to give us foreclosure help and even helped us with the sale of our home. We got to walk away from that mess and have started a new life, without a foreclosure on our credit report."
"I was going through a divorce and was about to lose the house. I didn't want to keep the house but I didn't want to go through the foreclosure process, either. But I had no idea that there were other options open to me in my state until I contacted 1st Foreclosure Prevention. I talked everything over with a very nice loss mitigation specialist and they gave me a personal and free foreclosure consultation. They were able to actually stop the foreclosure process and I was able to stay in my home until it was sold. After the divorce, I was able to buy a new home for myself and my children."
"We were pretty shook up about losing our home. After all, we have been here over 30 years. But we refinanced our home to help our son buy his. Then he lost his job and went into foreclosure and had to move in with us. We were about to go through the same foreclosure process and then we'd have nowhere to go. We called 1st Foreclosure Prevention and then helped us understand a few things about how to stop foreclosure. I wish my son had called him as this could have helped him. But it did help us and we were able to keep our home, thanks to them. Our son is getting back on his feet, but he would have done better had he called them and not gone through foreclosure. We're pretty happy with the service they gave us."
"I wanted out of my mortgage in the worst way - it was the worst investment that I could make. The roof leaked and there were tons of other issues. But I didn't want to go through the foreclosure process because I knew it would screw up my credit. So when I found out about 1st Foreclosure Prevention, I figured I would give it a try. I was struggling to make payments on a piece of property that I didn't want. I got a free foreclosure consultation from them and they told me different things that I could do to get out of it. They gave me great foreclosure help and even helped me get rid of the property. Now I have a great place and no foreclosure on my record. And working with them was easy, too. Thanks, guys!"
"I struggled so hard to buy my home for me and my children and thought I got a good deal on a loan. But then I found out that the loan amount was going to go up each month. I wasn't able to afford the new payments. I had gotten a new job after being laid off, but my new job didn't pay as much as the old one. I was really figuring that I was in trouble. I wanted to save my home from foreclosure, but didn't know how. I called 1st Foreclosure Prevention and they treated me with compassion and respect. They knew all about the law, too, and how to stop foreclosure. They gave me a totally free foreclosure evaluation and explained all my options to me. Because of them, I was able to save my home from foreclosure."
"I really thought that there was nothing you could do to stop foreclosure once it started. I was wrong. I found out that a borrower has plenty of rights and can get foreclos"