Do Loan Modifications Actually Work?
Loan modifications are a popular option most homeowners turn to when they are struggling with mortgage payments. It isn’t a secret however that it hasn’t worked as well as we hoped. The idea of “modifying” your current loan to create a more affordable payment plan seems enticing but do these popular loan modification programs actually work? Let’s looks at the data.
Don’t get me wrong, loan modifications do work for certain homeowners. Statistically, it is not for the majority. Mortgage Metrics Report reveals only 47.7 percent of the estimated 2.9 million loan mods are current or paid in full since 2008.
*excerpt from dsnews.com
“About 7.1 percent are currently less than 60 days delinquent; 14.2 percent are 60 or more days delinquent; 7.7 percent are in the foreclosure process. Lastly, 7.3 percent have already been foreclosed.
The OCC reports higher success rates among particular types of modifications. For example, the agency finds greater success among HAMP modifications. However, the OCC notes, “more restrictive qualification criteria restrict the number of borrowers who may qualify for a HAMP modification.”
Do you know of any friends or family who is successfully using a loan modification? What have you heard?
Peter
Comment
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Comment by Simon Campbell on April 8, 2013 at 5:45pm
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Here is a loan modification program that might just work: The Federal Housing Finance Agency has launched a new loan modification program for Freddie Mac and Fannie Mae loans. It is called the Streamlined Modification Initiative. This program is placed in the hands of the lenders allowing them to be proactive in helping borrowers obtain mortgage relief.
The program begins June 1, 2013 and will remain active until August 2015. It is available for borrowers on Freddie and Fannie loans who are 90 days or more delinquent on their mortgage.
Borrowers will not have to submit proof of hardship or financial documentation. There is not an extensive underwriting to qualify. Plus, lenders can initiate the loan modification. This means that delinquent borrowers could receive correspondence from their bank saying they want to help their client rather than foreclose on them. What a nice change from HAMP and HARP!
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