Loan Modification Update

The most glaring misconception this past week is the loan modification reports of success from the Making Homes Affordable Program. While many homeowners are being given a temporary life line from this program, the root of the trouble is not being fully addressed.

Most modifications involve a lowering of interest rates for a given time which helps homeowners now. Unfortunately, the interest that is unpaid is often put on top of the loan, very similar to the negative amortization loans that were so popular a few years ago. Does it truly help a homeowner if their loan balance goes up each month?

An article on RealtyCheck details that only 5 homes in the program received principal reductions in the mortgage balance. What is worse? Unemployed homeowners that need help the most, are not eligible for the program. The Florida Realtors article on re-defaults has some very sobering statistics. An article from Yahoo Finance discusses current anti- foreclosure initiatives and feels that they do not fully address the problems ahead. While the program is helping, improved solutions are needed.

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