Mortgage Modifications… Are they working?

So far, I have not seen any of the mortgage modification programs help home owners in need but I am hopeful that it will eventually work.  However, I’m sure there is a small percentage that actually work.  I’m not sure where the numbers of people being helped come from but they claim millions are being helped.

In my opinion, the HOPE NOW Modification Program was a flop.  Instead of losing your home, you could modify your loan to the current price it was worth and the bank would take the loss. Basically, a short sale with the current homeowner as the buyer. Banks were given a choice to help out distressed homeowners and in most cases choose not to do so.  If given a choice why would the bank choose to lose money?  Crazy as it sounds, in many cases the bank would rather have the home go to foreclosure and instead lose even more money.

Now, they are offering the Home Affordable Modification Program (HAMP). This is geared toward homeowners on unemployment who owe less than $729,750 or primary homeowners who owe more than 115% of their current value. To qualify, the home owner’s mortgage on their primary residence needs to exceed 31% of their income.  The incentive to the bank is $2000 from the government for the modification.

It’s better than the first modification plan because at least there is some incentive but I’m not sure the banks will be any more willing to take the loss.  We bailed out the banks, giving them billions in government money when it might have been better to divide the money amongst homeowners who actually needed the help because the banks do not seem to reciprocate.

Virginia Kazlouskas (Gregory), REALTOR®

Harmony Real Estate, Inc.
2 Winnhaven Drive
Hudson, NH 03051
(Office) 603-883-8840 X12
(Cell) 603-620-3428

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