Alternative Home Loan Modification Plans For Homeowners–How Are In-House Assistance Plans Helping?

Alternative home loan modification plans directly from mortgage servicers are reportedly helping a greater number of homeowners than the federal initiative, which is good news to those who have had trouble making their mortgage payment and are unable to find the assistance they need from the Making Home Affordable Program, but many are wondering why these alternative modification efforts are seeing more success in terms of assisting homeowners than the federal modification program.

One of the main reasons that has been cited for the success of alternative modifications is the fact that loan terms can be more flexible and, as a result, this could help homeowners who are in a variety of mortgage predicaments where they are having financial distress issues that prevent them from making their mortgage payment. According to, “Borrowers are getting more loans modified through private plans because the programs offer more generous terms and have less stringent requirements than HAMP.”

Understandably, these proprietary modifications can be more beneficial to homeowners due to the flexibility, as again, not all homeowners may benefit from the same type of universal assistance or can meet these guidelines that have been set in place by the federal program. While there have been talks of restructuring the federal modification plan, as there are homeowners who have benefited from federal assistance and there are indications that more homeowners are seeing success in the long term, a variety of issues that still plague modifications in general leave many feeling these problems must be addressed if the maximum number of homeowners who are in danger of foreclosure will be reached.

Obviously, homeowners are looking for a combination of interest-rate reductions, principal reductions, or mortgage term extensions as a way to make their monthly mortgage payment more affordable and there are accounts that homeowners, with a variety of servicers, have had to meet unreasonable conditions from their servicer before any of these home loan modification assistance actions may be taken in order to lower their monthly payment obligation. Yet, despite the fact that there have been questionable practices from some servicers, many of the major banks that are participating in these modifications are still able to offer foreclosure prevention assistance through home loan modification plans, even if they are from an in-house initiative.

The modification efforts from both the federal program and in-house plans are not perfect, but it’s felt that more homeowners may have a higher rate of success with these proprietary plans as servicers can tailor modification plans and qualifications to fit an individual homeowner’s needs if a federal modification plan has been denied. While homeowners can consult resources like housing counselors, the Making Home Affordable Program website, or simply talk with their servicer directly to ask about various options, individuals who are concerned about foreclosure may have not only options in 2011 through the federal program, which could revamp their efforts and somewhat restructure the program, but also these proprietary modifications can provide an alternative source of aid to struggling homeowners as well.