Homeowners Redefault Even After Loan Modifications

Homeowners are having to redefault on mortgages even after getting loan modifications because of trouble making mortgage payments.  Most defaulted and received loan modifications in the hopes that adjusting mortgage payments would help to make homes more affordable for those under the hardships of the recession.  However, despite the loan modifications there are now a growing number of homeowners redefaulting on their mortgages as they slip behind in payments yet again.

The problem with homeowners having to redefault despite their loan modifications is that a loan modification is set in place to allow a homeowner to catch up on missed payments. Yet, there is nothing done to adjust the interest rate on a home loan so there is really no help to the homeowner seeing as how any lower payment agreed to will be offset by the interest rates.

President Obama and his administration are in the works for a plan to combat the foreclosure problem and under his plan a loan modification interest rate could be as low as 2%.  However, no matter what the solution may be there has to be a combination of lower payments and interest rates for the homeowner until the nation’s economy can fully pull out of the recession.