Stop Foreclosure – Foreclosure Prevention

Posts Tagged ‘loan modifications’

If you’re being threatened with foreclosure by your mortgage company or bank than a loan modification might be the answer. Many homeowners are using loan modifications as a way to keep their homes out of foreclosure. The problem is that a homeowner must go through quite a bit in order to apply and get approved for loan modification.
Most loan modifications are being offered through the Making Home Affordable loan modification program. The growing trend is due to the government backing the program. This government backed home loan modification program requires the lender to put the homeowner on a three month probation period. If they can make payments in full and on time they are offered an affordable loan modification. These modifications include lower payments and interest rates for a minimum of five years. Some owners are getting rates lower than 5%.
Only about 15% of homeowners that are in danger of foreclosure are actually getting into the loan modification program. This may not sound like much but it has managed to slow down the foreclosure rate in the country. Lenders that are participating in the Making Home Affordable program are only helping about half of their delinquent home owners. Even though this needs to be addressed it a great improvement over where we were just a few years ago.
Back when the foreclosure issues started to arise, lenders didn’t do anything to offer home owners a chance to keep their homes. They just foreclosed and tacked on the late fees at the end of the loan. This practice did nothing to help the home owner. They still had to make payments that they couldn’t afford, so the chance of keeping their home was almost gone. With loan modifications the home owner can see lower interest rates, lower monthly payments, increase loan duration, and in some case a decreased loan principle.
Since the government got involved in the home loan issues that this country is facing. Many homeowners do not qualify for loan modification since they are receiving unemployment benefits so they have no means to meet the requirements of making on time payments for the four months. There is however a few lenders that are willing to help those are receiving unemployment benefits. But, with other debts like car payments and credit card bills most of these borrowers are unable to make the payments.
Loan modification has proven to be a effective alternative to bankruptcy as a means to keep your home out of foreclosure. The only problem that might arise if you have many other outstanding debts, consulting with a financial planner can help you manage your payments so you can reduce your debt. By paying off all your outstanding debts your future will be looking a little brighter and life will start to easier. The best part is if you do fall on hard times again your chances of receiving a loan will be increased.