Plans to help millions of homeowners stop foreclosure fast by reducing the size of their mortgage payments is theoretically getting underway. The federal mortgage modification plan would help those who owe more on their homes than the homes are worth.
Two months after the program went into effect, about 50,000 homeowners have been offered loan modifications. At the same time the rate of foreclosures is continuing unabated. One report lists 342,000 foreclosure filings last month. That number is up 32 percent from a year ago.
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It is taking some time to get the loan modification program going. This is to be expected when congress is involved. The banks are at the beginning phases of their mortgage modification operations as well. They see the writing on the wall and want to be ahead of the curve in case the government or the courts starts mandating loan modifications.
No one really knows if the loan modification program that the White House is proposing will be effective. Many homeowners who have tried to modify their home mortgages have reported success only through determination and in some cases legal advice from lawyers. This is risky and has the added cost of an attorney. Many homeowners who need a loan modification cannot afford a lawyer to represent them.
The worsening of the economy is the biggest hindrance to the program. The longer it takes to set the program in motion, the fewer people will qualify for modifications. There is an expected rise in unemployment for the coming months, which may keep more and more homeowners out of the program.
The White House is confident that the program will help upwards of three to four million homeowners once the program is up to full speed. However, what you wish for and what actually happens is not always the same thing.
The Democratic congress is trying to convince mortgage companies and investors to agree to the mortgage modification plan that the White House proposed. They attempted to pass legislation that would give bankruptcy judges the power to reduce primary mortgages. The result would be to "scare" the mortgage companies into modifying the mortgage or face a mandated reduction in bankruptcy by a judge. The measure failed in the Senate.
Waiting for the government to offer assistance in loan modification is not the best approach if you are facing the reality of foreclosure. There are steps homeowners can take to stop foreclosure now. This may involve talking to your mortgage company. This can be a daunting task and one that will may seem futile at first attempt.
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