Mortgage modifications for homeowners have been helpful in some cases where a homeowner is having trouble meeting payments on their primary home loan. However, many homeowners complained that mortgage modifications were unhelpful as they did not lower payments to an affordable level, and in some cases this was due to a second lien on a home loan.
However, programs like the Second Lien Modification Program and various state mortgage modification plans which are set to address second liens have been implemented in some areas and are hoped to begin in the near future, as a way to address this problem of second mortgages. Obviously, homeowners who have seen setbacks in their financial life or are facing cutbacks in their wages at their place of employment may have been able to handle mortgage payment on a primary and secondary mortgage, but are now in a position where these costs may lead to defaulting or worse.
Many homeowners are aware of the federal Making Home Affordable Program but there are some homeowners who may be unaware that the Second Lien Modification Program is also available to offer more affordability for homeowners struggling to make their monthly mortgage payment. Rules set down by the Making Home Affordable Program have stated that when a homeowner receives a modification on their primary mortgage, participating servicers must then offer a modification on a homeowner’s second lien in the hopes of providing a mortgage payment plan which can be sustained during the difficult time a homeowner may be having in their financial life. Also, homeowners who make timely payments under this second lien program may qualify for a principal reduction of up to $1,250.
There are also some programs offered through various state housing agencies, as part of the Hardest Hit Fund, which will offer individuals the opportunity to find more affordability and a reduction or modification in their second mortgage, which again, is hoped to offer lower payments to homeowners who are struggling in this particular mortgage situation.
Yet, just as primary modifications from state housing agencies or the federal government are no guarantee, these second lien modification programs are also not guaranteed to prevent the loss of a home through foreclosure. However, homeowners do have this option available in cases where a second mortgage may be causing trouble, and as a result, modifying this second lien may be helpful for certain homeowners when it comes to preventing foreclosure.