The Obama Making Home Affordable home loan modification program has seen its share of troubles over the past months and a recent proposal by Congress to repeal the program has many homeowners wondering what may become of their foreclosure prevention opportunities were the federal modification program to be cut short, while others feel that a full repeal of the program may be shortsighted as there are options to tailor the program by revising guidelines and servicer requirements so that more homeowners may find the help they seek.
A recent article made mention of numerous difficulties which homeowners have faced and troubles with oversight within the home loan modification program that have reportedly caused the lackluster performance leading to the modification plan falling short of its original goals. Some of the issues which were reportedly causing a stifling effect within the modification program center around oversight problems that have allowed some financial institutions to improperly implement the program without any penalty.
Financial institutions are not required to participate in the Making Home Affordable Program but when they enter into contracts with the Treasury Department to offer home loan modification assistance and receive incentives from the government as a result, there are treasury officials who state that even when banks fail to properly adhere to program guidelines, there are few measures which can be taken in order to correct any problems.
There are those who feel that the home loan modification program’s shortcomings related to the original goal which was set and current levels of homeowners who have been helped simply negates benefits from the continuation of the program, and as a result, members in the House of Representatives have proposed legislation to end the federal modification program. Yet, there are those who feel that rather than simply cutting the program off completely, changes could be made to better suit homeowners in a way that may allow for more home loan modifications in the coming months.
One suggestion that was made was that the treasury could cut off incentives to financial institutions that do not adhere to program guidelines, but there is concern that if servicers are punished they may forego using the federal modification program altogether. While blame for the program’s lack of success has usually fallen on the shoulders of financial institutions and the need for more oversight, there are questions as to why a proposed repeal of the home loan modification is in the works due to the fact that there have been homeowners helped by various mortgage servicers through the home loan modification program and, if problems in the program could be corrected, there may be more homeowners aided in the future through these foreclosure prevention efforts.
Yet, some feel that the modification program is stopping the housing market from finding a bottom, which could hinder recovery, but arguments against this line of thinking often cite the fact that if homeowners faced widespread foreclosure and, as unemployment remains high, recovery in the housing market could be extended due to the fact that numerous homes sitting empty could decrease property values and cause other strains in the area of housing.
At its core the home loan modification program prevents homeowners from the loss of their home during an economic time where the personal financial lives of many homeowners have led to situations where millions may find themselves without a roof over their head were this lifeline to be taken away. While there are those who feel that stricter penalties levied against banks could aid to troubled modification program, but there is, again, concern that banks may simply walk away from the modification plan if incentives are removed and these penalties are enforced.
However, if the home loan modification program is repealed and this path to foreclosure prevention is shut to homeowners, there are still options like proprietary home loan modifications that are offered directly from servicers and have reportedly been outnumbering the federal modification program as a result. Whether it is strict guidelines set in place by the federal Making Home Affordable Program or the the lack of oversight which allows servicers to improperly implement modifications, it’s no secret that the federal modification program does have a lot of room to improve, but changes will be necessary before more success may be seen in the federal modification initiative. Yet, servicers do still continue to offer these federal assistance and in-house, alternative modification plans that have aided numerous homeowners over the past months find more affordable monthly mortgage payments and security against the loss of their home.