A Loan Modification Can Help You Stop Foreclosure

There are reports that more than 68,000 trial mortgage modifications through the U.S. Treasurys Home Affordable Modification Program (HAMP) became permanent in April. This represents an increase of 13 percent from March when about 60,000 three-month trial modifications converted to permanent loans. Another 104,000 borrowers received non-government related modifications through their lenders during the month of April. This information was reported by Hope Now, a private alliance of investors, mortgage servicers, mortgage insurers and nonprofit counselors.

For a large number of people in North Carolina, loan modification programs represent one of the few possible ways they can try and stop foreclosure: NC homeowners who have reached the point where they need to try and get help to avoid losing their homes are looking to loan modifications in hopes of either preventing or resolving mortgage delinquency.

It's important to note, however, that the influx of delinquencies into the foreclosure system has slowed down as more and more borrowers are securing loan modifications. According to the monthly foreclosure report on RealtyTrac, released in June, while total foreclosure activity is decreasing, the number of homes being repossessed by the banks has hit a new high. This, right after Bank of America announced they will start to push short sales and other alternatives to foreclosure. It appears that lenders are working faster to complete forestalled foreclosures rather than carrying the burden of putting these homes back on their books.

Back in March, servicers and lenders began verifying information about income documented by borrowers; prior to a U.S. Treasury requirement that recently took effect, some servicers were green-lighting trial modifications without verifying the borrowers' stated income. HAMP data shows that servicers who began trials based on verified documents generally had higher conversion rates than those who did not. The forbearance period will end and the homeowner will be assessed for a loan modification if they become re-employed. Under the new unemployment program, unemployment benefits no longer qualify as income for the loan modification.

For North Carolina residents wishing to know more about the new loan modification guidelines, there are few professionals better equipped to answer your questions than a good debt counselor or a consumer attorney. NC residents now have even more incentive to learn about the loan modification process - it doesn't work for everyone, but it has saved many families from losing the roof over their heads.

In other loan modification news, according to a HAMP press release, by July 1, all mortgage servicers participating in HAMP will be offering extra assistance to homeowners who are struggling to make their mortgage payments because of unemployment. This new HAMP unemployment program will offer homeowners a forbearance period of approximately three months to lower or suspend their monthly mortgage payments while they are looking for work.

HAMP has helped many Americans dodge foreclosure, but in many ways, the mortgage modification process has been slow and the criteria are tight, bottlenecking the influx of delinquent (or nearly delinquent) borrowers looking for relief.