 Foreclosure, Home Loan Modification, and What The Homeowner Needs To KnowSaturday, October 24, 2009 - Article by: Dustin Rohde -
The current real estate and foreclosure crisis began two or three years ago. Since then homeowners have been working towards getting home loan modifications from their banks. As a result, the banks are becoming more and more buried under requests; many of them unprepared for the number of requests received. All of this equals up to homeowners who qualify for home loan modifications being left in limbo while the banks struggle to keep up. The government’s solution to the problem: President Obama’s Home Affordable Plan. HAMP (Home Affordable Modification Program) is a $75 billion initiative designed to help people afford their mortgages and stay in their homes. One program it funds is a home loan modification program. Lenders are encouraged to assist borrowers who are having trouble keeping up with their monthly mortgage payments. The banks are rewarded with $1000 for each home loan modification that they complete, so they are more than willing to help. Also, they are more than likely to make ore from the renegotiated loan than they are from the foreclosure. A Home loan modification is a renegotiation of your initial mortgage. This modification can reduce your interest rate; change your rate from variable to fixed, or even both. It can extend the duration of the loan (usually up to between 30 and 40 years). It can even lower the principal for borrowers whose homes have lost their value. Any one of these changes can mean the difference between the homeowner keeping their house or losing their house. If the lender doesn’t renegotiate the borrower still has 90 days from the first notice of delinquent payment until the bank can step in and seize the house. This will allow the borrower a little time to think of an alternative such as negotiating a short sale with the bank, or consulting a professional home loan modification specialist. A short sale is when the homeowner sells the house for less than its value, and the bank accepts the money and erases the rest of the debt. Banks will sometimes do this because it is preferable to them owning a house it may take months to sell under in the current housing market. |
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