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Digital News Report – The government loan modification program was designed to help save homeowners from foreclosure while slowing the decline in home prices.
The administrators of the Making Home Affordable Program have updated their website making it more user-friendly. The main page includes a toll-free number and a rotating banner of success stories. The program has worked for some homeowners.
There are some problems with the program. Permanent modifications have been rejected because it is more profitable for the servicers, typically a bank like Chase, Citibank, Bank of America or Wells Fargo, to foreclose than make the modification permanent. Lawmakers are working to fix that problem.
One report suggests that homeowners are rejected without any explanation. There are concerns that the servicer may not be working in the best interest of the investor or the homeowner.
The homeowner may not realize that the servicer no longer owns their loan. The bank may just be servicing the loan by collecting payments and filing the paperwork. In some instances, it may be more profitable for the servicer to foreclose than to modify the loan.
After a trial modification period, the servicer may begin foreclosure proceedings while the homeowner is waiting for a permanent modification decision. Despite providing all of the paperwork and doing what was required during the trial period, the servicer may still foreclose.
The Home Affordable Modification Program (HAMP) may not help everyone. Some homeowners may not qualify and in some cases the original loan documents may forbid a modification.
Besides modifying the loan, homeowners can receive help refinancing through the program. There is also help for the unemployed.
According to the Obama Administration, the distressed homeowners who apply to the program have an average annual income of $46,000. The median credit score is 570 and the loan balances are averaging $232,000. Typically the homeowner is underwater (upside down) with a loan to value ratio of 118 percent.
By Tina Brown