Loan modification is not a brand new concept. It has always been something lenders and banks operated. However, with the tough economic climate we face today, there are more Americans exploring options to avoid foreclosure, and as such mortgage modification loan has been highlighted in the press and is receiving much more attention than normal. Negotiating more favourable loan terms with lenders is incredibly frequent today, but it seems that the loan modification process is causing some people a little confusion. Let’s bust the loan modification myths.
First, check out their website or talk to a Wells Fargo representative about your options. They have several alternate repayment plans available for struggling homeowners, and no single one is right for everybody. If you’re most interested in loan modification, you have two options: the Wells Fargo modification program, or the federal government’s making home affordable plan.
Foreclosures are inconvenience and potentially very expensive for lenders. So it makes sense that the lenders themselves are also keen to avoid to proceeding with a foreclosure anyway. Under the Making Home Affordable scheme, though, lenders also receive financial incentives for allowing their borrowers to opt for loan modification. It is now more profitable than ever for lenders to assist borrowers in avoiding foreclosure.
Another common myth about the Making Home Affordable (MHA) scheme is that a large number of short term investors, speculators and buy-to-lease landlords are taking advantage. This is entirely untrue. In fact, there are guidelines and rules in place with MHA to prevent such people from benefiting from the program. Only mortgages on homes occupied by the owner are eligible for loan modification through MHA. Investment properties, unoccupied homes and condemned properties will not qualify for the scheme.
What were the reasons for this? Although designed for people suffering a temporary financial hardship, mortgage companies frequently gave these loans to people who had permanent or long term financial hardships. No analysis was being done to see if they would be able to resume making their regular monthly payments after they received a loan. The entire focus of this program was to eliminate any amount that the people owed. There was no focus on reducing their monthly payment to a level they could afford or reducing the principal balance on their mortgage. The HomeSaver Advance program failed to offer people facing foreclosure a viable way to overcome their financial problems and save their homes.
Learn more about Obama Mortgage Relief Plan Qualifications.
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