Today Show Report Loan Modifications Help Just 5% of Applicants!

Click here to view the segment

In a recent segment entitled Expert Tips for Distressed Homeowners, the Today Show discussed the fact that one forecast estimates more than 2 million more homes may be lost to foreclosure in 2010. This has some experts questioning if a mortgage modification program, put in place by the Obama Administration has actually made things worse.

The program entitled the Home Affordability Modification Program (or HAMP) was put int place in February of 2009 with the goal of spending $75B to help 3 to 4 million distressed homeowners. To date, 760,000 homeowners have applied, however, only 31,000 have been granted permanent modifications or just 5% of the goal!

This failure is attributably to two factors, first the program focuses on reducing the mortgage interest rate and not the principal amount of the loan. With over 40% of home being underwater in some markets, that is the balance owed on the loan exceeds the market value of the home, homeowners simply have no desire to hold on to and continue making payments over leveraged assets. Secondly, many homeowners can no longer afford their payments even if they are granted modifications this due to job losses and reduced incomes. That said, the fundamental flaw in the program is it's failure to address the issue of principal reduction as homeowners simply do not wish to hold on to a property which is worth less than they owe on it and the fact that the program is optional and lenders are not required to participate. Many homeowners also find the program to be extremely disfunctional and complicated as there is a singificant amount of paperwork involved and the banks frequently mismanage this documentation and will weeks later request it be resubmitted. Furthermore, many homeowners realize that there are significant opportunities available in the real estate market at this time and if they opt to do a short sale they can be eligible for a new loan in as little as 18-24 months. The short sale process itself, including the time associated with identifying a buyer often takes as long as 6-9 months and thus homeowners end up living rent free during this time which helps them save enough money to begin to get back on their feet.

Many homeowners fail to realize applying for a loan modification will adversely affect your credit score and thus if you apply for a loan modification and like the overwhelming majority of applicants are denied, or if you receive an approval but the modification only entails a interest rate reduction (less than 1% of modification include a principal reduction) the damage has already been done to your credit.

The best solution for homeowners is to speak with a Realtor who specializes in working with homeowners in distress about their unique situation and the options that are available to them.

If you're facing foreclosure you're facing some very important decisions. We want you know you're not alone and we are here to help with any questions you may have to assist you in making the best decisions for your situation. There is no charge for this service and we are happy to help! We offer confidential and professional real estate advice.

The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley Columbus Delaware Downtown Dublin Gahanna Grandview Heights Granville Grove City Groveport Hilliard Lewis Center New Albany Pickerington Polaris Powell Upper Arlington Westerville Worthington

Search the Columbus MLS, Find Homes, Short Sale Listings, Foreclosure Listings