Making Home Affordable Update for September 2010

The mortgage loan disaster has struck very hard inside the United States even now in September 2010 we are still dealing with the economic collapse of the job and housing industry (July housing down 27%+ for existing homes) and millions are still losing their homes even with Obama's Making Home Affordable program.

To fight the consequences of the overall economy on individuals, President Obama's current administration has gone to tremendous lengths to assist millions of struggling home owners make their mortgage payments and hold on to their their property. Any time homeowners are powerless to come up with their monthly mortgage payments this hurts not only the homeowner, but also the poor helpless lending institutions (like any of us we care about these money hungry banks ). The Making Homes Affordable Program is a program that was first created to help millions, but still continues to help very few. Many of the problems come from lending institutions dragging their feet to help homeowners.

Occupational cutbacks, illness, layoffs, short-term unemployment and the likes have certainly triggered a decrease in the quantity of homeowners in which will be in a position to make their mortgage payments. The united states government has made the decision to encourage these lending institutions to help troubled property owners keep in their residences by supplying them with home loan modifications through the Making Home Affordable Program. The loan modifications permit financial institutions to lower interest rates and lengthen the term of the original loan in order to make it affordable to the homeowner. These 2 components significantly lower monthly installments if you can actually get the bank to do it.

Banking institutions benefit from these loan modifications because they allow homeowners to continue to pay on the mortgage instead of having to foreclose on the property which causes the financial institution tens of thousand of dollars to do. Homeowners that would be much less likely to pay the amount of money necessary by the unique conditions of the mortgage loan are most likely to come up with the new modified loan payments. Even though the banking institutions gather a smaller amount of money from individuals, the lower amounts provide a way for many more homeowners to be capable of repaying their home loans, remain in the home and aid in deterring foreclosure.

On occasions such as these individuals and companies should be more willing to work with each other to avoid foreclosure, but so far banks are not allowing customers to use the making home affordable plan as it was intended to be used. A mortgage loan modification is usually beneficial to both parties involved, although it may at times be in either parties interest to not complete the loan modification.

The conditions of the mortgage loan modification can be negotiated. The more you learn about the loan modification procedure, the more effectiveness you will have during these discussions. Home loan modification rates are frequently totally free and can provide you with an edge when negotiating the terms of your mortgage loan.

Communicating with your loan provider or other modification specialist will prepare you for the most effective method to modify your mortgage loan. By approaching your loan provider for a loan modification, you will take a step in the direction of strengthening not only your own circumstance, but also that of the overall United States economy. Thanks to the Making Homes Affordable program, individuals now have a strategy to meet their mortgage loan's payments and keep their homes, it is simply up to the financial institutions to follow the rules of the program.

Making Home Affordable Continues To Struggle

The Making Home Affordable Program has been far from what we would call a great success with only around 300,000 home mortgage modifications across the country, this when possibly 10's of millions really need the help. With the real threat of a double dip recession on top of us this problem will only grow worse and create even more pressure for an already failing program - The making Home Affordable Plan. As an example of the problems we are still seeing with the Making Homes Affordable Program over 60% of homeowners who sought help through this program in California failed to get it and slipped into foreclosure.

With over 60% of homeowners losing their homes to foreclosure the reality of actually getting the golden parachute from the Making Home Affordable Plan gets slimmer with each passing day. 53 mortgage advisers with caseloads exceeding 13,000 clients were surveyed in-order to come up with this statistic.

With foreclosure rates still climbing in California , Nevada and elsewhere across the country you can count on prices continuing to fall throughout the rest of 2010 and into 2011. With the Obama administration doing what would be impossible for you or I, which is trying to spend their way out of debt, the double dip recession and fall of the United States as an economic power is near.

It's important to note this survey does not point to those who went into foreclosure even after having their homes modified through the Making Home Affordable Program. Many folks just like yourselves have been through this process only to have unemployment dry up before being able to find a real job in this abysmal economy

Making Homes Affordable Breakdown
(AKA Obama Mortgage)

Overall, only around 360,000 out of 6+ million eligible homeowners have started the mortgage modifications process with their lenders so far. Under the Obama Program in which Congress enabled $75 Billion to be used as an incentive to mortgage lenders/servicers to reduce the monthly payments of distressed homeowners to 31 percent of a borrower's the income.

Only around 9% percent of homeowners needing help have actually been able to get their servicer to enter into the modification process as the incentive for banks through the Making Home Affordable Program to actually do the modifications was woefully inadequate. Servicers who actually offer modifications through the Making Home Affordable Program get only get $1,000 upfront and another $1,000 per year so long as the homeowner stays current, and homeowners can get $1,000 a year toward reducing their principal for up to five years.

So lenders/servicers will get at most $6,000 from the government while having to voluntarily write off future profits that can easily get into hundreds of thousands over the life of the loan. Homeowners mean while get $5,000 over 5 years if they stay in a house that could be easily be worth $250,000 less than what they owe on their mortgage. Not much of a win/win scenario and one that only the government could come up with.

Somewhere around 5% of the distressed borrowers who where initially eligible for mortgage modifications under the Obama administration's signature effort to reduce foreclosures have been helped so far, the Treasury Department reported . That is an improvement over the previous months report on lender/servicer participation in the "Making Homes Affordable Modification Program".

The government says "At this early date, Making Home Affordable has already been more successful than any previous similar program in modifying mortgages for at-risk borrowers to sustainably affordable levels, and helping to avoid preventable foreclosures". Exactly what previous economic condition are they comparing this to?

Disappointed that servicers had been slow to help homeowners and stop the rise in foreclosures, the mighty money spending Obama administration lectured bank CEOs in a letter earlier this summer.

"We believe there is a general need for servicers to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share," wrote Treasury Secretary Tim Geithner and Housing and Urban Development Secretary Shaun Donovan. He can say there's a need for them to do this until he's blue in the face, but with totally revamping the bogus Making Homes Affordable Program it is never going to happen.

In early August the Treasury shamed servicers by releasing specific bank-by-bank data on participation in the program. The nation's largest, Bank of America, had done modifications for a mere 4 percent of eligible borrowers. In August, Bank of America improved to 7 percent.

Don't Plan on any of these meager improvements to temper disappointed bank critics and homeowners.

"Several months into the Making Home Affordable Modification Program homeowners and their proponents report that the program is not providing a sufficient number of loan modifications to homeowners, the modifications offered often do not meet the Making Homes Affordable guidelines and the program itself still presents serious barriers to mass loan modifications," said Alys Cohen, a staff attorney with the National Consumer Law Center in prepared remarks before the housing subcommittee.

Making Homes Affordable - How to Use The Fed's Program to Your Advantage

Lots of people are still talking about the Making Homes Affordable plan that came out in March 2009.  The program has two basic parts: the HARP, or Home-Affordable Refinance Program, and the HAMP, or Home-Affordable Modification Program.  

These two programs are intended to keep housing prices for middle- and lower-class Americans stable.  Specifically, the primary goal is to keep families out of foreclosure.  This in turn keeps your home from selling below market value, which then keeps other homes in the area from experiencing a drop in value because of your home's low sale.  The government believes that by stabilizing housing costs and keeping families in their homes, they can help to stabilize the economy at large.

The HAMP side of the Obama Mortgage Program is for the millions of Freddie Mac- and Fannie Mae-owned mortgages.  It affects homeowners that would normally be unable to refinance their mortgages (most often because they still owe more than the value of their home on the mortgage.)  The effect of the plan is to allow refinancing up to 105% of the value of the home at current interest rates.  The primary qualification for the HARP is a satisfactory credit rating.

The Program is made to keep families who are in (or are about to enter) foreclosure in their homes.  This program offers assistance to families who has suffered financial hardship due to an unexpected reduction in income (a lost job, for example) or who have an adjustable-rate mortgage that adjusted upwards.  The household cannot apply if they are entirely without income, but credit rating is not a factor.

The HAMP can lower your mortgage interest rate to as low as 2% for up to 5 years.  The bank may also extend the term of your mortgage to 40 years (typically that's an extra 10 years to allow you to pay back your mortgage, which can lower your monthly payments significantly.)  Finally, it can put a portion of your principle balance on forbearance - which means you don't have to pay interest on that portion for a period of time.  The goal of all of these measures is to ensure that your mortgage costs you less than one-third of your monthly household income.

Under this plan, your lender is able to determine how they want to modify your loan, and they don't always adhere to the spirit of the plan.  If your lender offers you new terms under the HAMP that you feel unfairly penalize you down the road (for example, a 40-year mortgage means you pay interest on your loan for an extra 10 years, which is a lot more money in the long run, even though the monthly cost is lower), consult an attorney or a reputable loan-modification company.

If you feel like you can benefit from the Making Homes Affordable Program, talk to your family financial advisor and your mortgage lender about the effects of applying.

Previous Making Home Affordable Articles

Beware of Foreclosure Rescue Scams - Help Is Free!

Click here to go over the bill itself and see all of the "Making Homes Affordable" guidelines

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