Home Loan Modifications Help Troubled Homeowners
Foreclosure Prevention Stats from April Offer Hope for Borrowers
Distressed homeowners often assume that foreclosure is the only way out. However, many have been helped by home loan modifications.
Home Loan Modification Statistics
On July 15, 2009 Federal Housing Finance Agency Director James B. Lockhart released the FHFA’s latest Foreclosure Prevention Report. The report highlights steps taken by Fannie Mae and Freddie Mac to stop unnecessary foreclosures and help people to stay in their homes. Loan modification data is included under FHFA’s Streamlined Modification Program, which was launched in November 2008 but ended in April 2009.
There was a decline in completed loan modifications of 12 percent in April as banks and other institutions ended the Streamlined Modification Program (SMP) and implemented the Home Affordable Modification Program (HAMP). The reason for the drop is that modifications under the HAMP plan must undergo a three-month trial period during which time the borrower must show that they are able and willing to make the modified payments. Results of the HAMP program won’t begin showing up until Q3 of 2009 as borrowers complete their three-month trial period.
Interestingly, loan modifications were responsible for 48 percent of all foreclosure prevention actions in April. Of those completed in April, 75 percent involved both rate reductions and term extensions. Deeds in lieu and completed short sales accounted for most of the remaining 52 percent of foreclosure prevention actions.
Delinquencies continued to rise. Loans 60 or more days past due rose approximately seven percent to 1.2 million. This is a clear indicator that the banks and lending institutions need to continue to proactively help borrowers to modify their loans or find an alternative in order to stop the downward spiral.
Good News About Foreclosures
On a positive note, the report indicated that foreclosure starts – the initiation of the foreclosure process – declined three percent compared to March of 2009. While this was due in part to servicers delaying action against borrowers who pursued a modification under HAMP, some see this as an encouraging sign in this troubled economy.
These statistics may not help the individual homeowner enduring the stress and anxiety caused by these hardships, but they should offer hope. If individuals facing foreclosure take anything from this information it should be that they have options. Too many Americans have lost site of that during these trying times. Lender representatives all-to-often enter foreclosed homes only to find a large pile of unopened bills and notices from the lender.
Homeowners need to realize that they have options. Modifications are happening everyday. Under the terms of HAMP, homeowners have an opportunity to seek a modification then prove their ability and desire to pay with the three month probationary period. For those that don’t qualify for HAMP, a short sale or deed in lieu is an alternative. It may not be the favored option, but it does leave the homeowner in a much better situation than a foreclosure. Gaining an understanding of the terminology used can be a great way to get started on the process.
Source: Federal Housing Finance Agency
There is Hope for Homeowners
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