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Home / Loan Modification Is Saving Homess

Loan Modification Is Saving Homes

The Homes Affordable Modification Program, also known as Making Home Affordable, seems to be a success. Enrollees continue to increase and many Americans are able to avoid foreclosure altogether.
In addition to the success of the government program, many banks are finding that their own loan-modification services are in high demand as well.
According to the Obama administration, the Home Affordable Modification Program report card over 360,000 Trial Modifications have been started and over 570,000 Trial Plans have been extended to borrowers.
Most loans are covered by the program and up to 45 loan servicers have signed up to offer the Home Affordable Modification Program to millions of Americans, if necessary.
The Treasury has arranged for up to $75 billion to be used in home loan modification efforts. According to estimates, anywhere from 4 to 9 million Americans can benefit from the program, as long as they meet certain requirements. The program works because it provides incentives to loan services and eliminates fees for borrowers while offering reduced interest rates on their mortgages. Combined, these effects could lead to many prevented foreclosures. A borrower could be eligible for a loan modification or a complete refinance.
The government efforts are relatively new – modification and refinance programs have been available through private loan service providers for some time. Many borrowers may not be aware of the government programs in place to help stop foreclosure, despite the fact that growing numbers of Americans are needing help to keep up with their payments.
According to data from the Mortgage Bankers Association (MBA), approximately 1 in 10 homeowners are behind on their mortgage payments – the highest rate since 1972, the earliest date the MBA began recording this data. This rate includes borrowers that have one or more late payments, but excludes borrowers already in foreclosure.
The overall weak economy adds to borrower’s financial difficulties. Many people are losing their jobs – which means payments fall behind. Even news of improvements in the overall economy does not tell the whole picture – if one person’s income falls and someone else rises – that can still mean a lost home.

Private Lenders Fill the Gap

A pitfall of the Making Home Affordable Program is that it seems to treat everyone the same, and the requirements may not include as many people as need help. Furthermore, the only debt that is considered is mortgage debt. Borrowers with other hefty financial obligations may still end up defaulting because their total obligations are too much to handle.
Private banks with their own modification programs are attempting to fill this gap with a variety of ways to help borrowers with their mortgages and other aspects of their cash flow situation. In order to avoid a cookie-cutter approach, many loss mitigation options can be discussed with a lender, in addition to the Make Home Affordable Program. The main point is that borrowers should understand there is plenty of help available to prevent foreclosure.