Private Alternative Home Loan Modification Opportunities For Homeowners–Government Modifications Slow

While federal home loan modification assistance is still being sought out by numerous individuals who fear foreclosure, there are indications that this initiative has begun to slow and may not have reached the number of homeowners who potentially could have benefited from this foreclosure prevention initiative. Yet, despite talks of officials wanting to repeal the modification program and essentially end the federal home loan modification plan, private home loan modification programs directly from servicers are reportedly up for the year 2010.

The federal Making Home Affordable Program did see an increase in the overall number of home loan modifications that were made in 2010 as well, but many who are opposed to this program point out that foreclosures were beginning to close the gap on the number of homeowners who were given a permanent home loan modification and there is also rising concern over the sustainability of home loan modification programs as there are homeowners who redefault on their mortgage within a year after receiving home loan assistance.

Neither the federal home loan assistance plan nor proprietary home loan modification programs are perfect, but it was stated in a recent report on Housingwire.com that while federal home loan modifications were down, proprietary modifications had seen an increase in 2010 when compared to the previous year’s data.

In fact, it has been reported that proprietary modifications outnumbered federal modification assistance plans and this could be due to the fact that servicers personally implement these plans rather than apply universal guidelines which may disqualify some homeowners or cause confusion and the delay of assistance from being seen. Some servicers who use the proprietary program are also those participating in the federal modification plan and it has led many to question why federal modification efforts have not been as successful as proprietary home loan modification plans, but this could be due to the fact that servicers do not have to apply these strict guidelines to every homeowner’s situation and may be able to offer more flexibility in modifications as a result.

While homeowners can still receive both federal and in-house, alternative home loan modifications, there is still concern over the future of the housing market as a great deal of homeowners who may either fall into foreclosure despite having a modification program in place are simply adding to a housing market where properties are simply sitting empty but home sales are not on pace to where servicers can clear these backlogs of homes, which is one reason that home prices are felt to be remaining low.

It’s hoped, however, that continued modification efforts can keep troubled homeowners in their home until factors like unemployment begin to improve and more homeowners can either reenter the housing market or at least find some sort of stability in their income for their monthly mortgage payment.