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Digital News Report – The government loan modification program is working, at least for some homeowners. The program has not helped everyone and according to some who have complained, the program has hurt them.
The states of Nevada and Arizona have filed lawsuits against some lenders they say broke the law. California has set up state programs to help slow the tide of foreclosures.
Note-holders have complained about lost income because loan modifications. The note-holders actually owns the loan. The bank may just be the servicer of the loan. The banks include Wells Fargo, Chase, Citi and Bank of America, and some of America’s largest lending institutions. Servicers are responsible for collecting the payments, assessing late fees and working with the homeowner. They are supposed to work in the best-interest of the note-holder.
Not all servicers have the authority to act on behalf of the note-holder. Some face limitations on the number of modifications they can perform and sometimes the original loan contract contains limitations that prevent a modification.
Homeowners have been turning to the Making Home Affordable Program for help. This program provides free counseling as a conduit between the borrower and the servicer. The banks will provide a temporary modification period to see if borrowers are able to make the new lower payments. If the borrower continues to provide paperwork and make their payments, the loan is supposed to become permanent.
Some servicers have denied a permanent modification after the trial period, even when the payments were made. In some instances the borrower failed to complete all of the paperwork.
Some homeowners were told that they would not face foreclosure while being considered for a modification. But they were foreclosed on anyway.
Some homeowners have received success outside the government program. In some cases the modifications are temporary giving the homeowner time to turn things around.
Despite the problems, the Obama Administration has reported that the Home Affordable Modification Program (HAMP), the Second Lien Modification Program (2MP) and the Home Affordable Refinance Program have helped over a million families.
If the homeowner fails to get help with the program there is the Home Affordable Foreclosure Alternatives Program which provides help with short sales and deed-in-lieu of foreclosure transfers.
By Tina Brown