Some homeowners have faced bankruptcy rather than foreclosure when they were unable to obtain a home loan modification from the Making Home Affordable Program. Numerous mortgage servicers like Bank of America have seen bankruptcy come to their homeowners when they did not qualify for a home loan modification plan, and this has homeowners concerned over whether modification plans are being implemented properly or if homeowners are simply still struggling from various financial difficulties.
According to the October Making Home Affordable Report, Bank of America had 3,938 bankruptcies in process, but this number was down from the previous month where 4,102 bankruptcies were said to be in process for homeowners who had their trial modification canceled. While there was also an increase in bankruptcy problems reported for homeowners who were not accepted into a trial modification, there is debate over whether servicers need to do more to offer assistance through the federal modification program or if homeowners are simply not qualifying for these assistance plans.
The issue of modifications has brought a great deal of criticism to many banks, and Bank of America is one of the financial institutions which has been blamed for homeowner difficulties. While there are some cases where homeowners may have had more trouble than was necessary in the modification process, financial institutions often point out that in-house modifications are said to be increasing at a higher rate than federal mortgage modifications, and this points to homeowners simply not meeting HAMP qualifications.
Homeowners who are receiving assistance from proprietary home loan modifications do still report troubles, as both federal and in-house modification programs are seeing homeowners default despite lower monthly payments. No servicer or homeowner has been perfect when it comes to the modification program, but these modifications have aided some homeowners when it comes to preventing foreclosure. Yet, homeowners who are still struggling do feel that the payment requirements or qualification processes for these modification programs are simply too strict and, as a result, there have been bankruptcies and foreclosures seen by many homeowners.
It’s true that there are troubles which remain concerning foreclosure prevention and bankruptcy, but homeowners are still being prompted to contact their mortgage servicer or consult resources like the Making Home Affordable website for more information on the federal home loan modification program or in-house mortgage modifications available directly from mortgage servicers. There are also extension programs from HAMP which may help address issues being seen by homeowners who are unemployed or in an underwater mortgage situation and the Hardest Hit Fund has provided some states with the ability to aid homeowners through state-specific plans as well.