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Modifying your Mortgage Debt and Still No Impact

[Dec 9, 2008.]


An AP report came out this morning claiming that more than half of the homeowners who modified their loan are in default yet again.

Ok so all those workout plans and the effort put into keeping homes out of foreclosure, is it all for not?

The new data raise questions about whether government money may be better spent on creating jobs, rather than averting foreclosures, said John Reich, director of the federal Office of Thrift Supervision office at a housing industry forum sponsored by his agency.

"I do have concerns about allocating federal resources" Reich said.

However, many experts claim the bulk of loan modifications don't actually provide much financial relief for borrowers.

This raises the question, what were the actual modifications in the first place?

Could they have been “rate freezes” or some other simple adjustment to the existing plan or where then modified forbearances adjusting for missed payments only to increase the payment slightly to get the mortgage payments caught up.  Either way, this simple approach doesn’t seem to be working.

So here is a statistic, one in 10 Americans with a mortgage is either behind or in foreclosure, and more than 500,000 jobs were lost in November.  Now if that isn’t a bright shiny picture I don’t know what is!

I guess it is no surprise that we can expect the US to have about 2.25 million foreclosures in 2008.

There is a push to halt foreclosures all together for 3-6 months while the government can put together an aggressive approach to help avoid all these foreclosure still yet to come in 2009 and beyond.  Emphasis is being put on keeping homeowners in their homes and modifying their mortgages accordingly.

This will mean a more aggressive stance from lenders and mortgage holders to help people stay in their homes!  Hopefully there is a solution in there somewhere.  Only time will tell.



About Author:

Brent Lane is a Mortgage Consultant in Roseville, California. He helps homeowners in California with their mortgage financing and writes on his BLOG at www.thelanegroup.blogspot.com

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