Bank Of America Homeowners Facing Bankruptcy After The Making Home Affordable Program–January 2011 HAMP Report

Bank of America homeowners who may be considering bankruptcy due to their financial predicament have usually turned to some form of loss mitigation program, like a home loan modification plan, but for those who were denied either a trial modification or had there trial modification canceled, recent reports from the January 2011 Making Home Affordable Program have shown that there are increases in the number of homeowners who are in the process of bankruptcy after being denied some form of federal modification program assistance. However, there are alternative routes that homeowners may be able to seek before turning to bankruptcy as foreclosure prevention efforts do go beyond the federal modification plan for many servicers, particularly major financial institutions like Bank of America.

The reports that track these homeowners have seen ups and downs in various areas, but Bank of America saw an increase in the number of homeowners who are currently in the process of bankruptcy after having their trial modification canceled as the previous number in December 2010 stood at a total of 4,492, while the January 2011 report stated this number was up to 4,781. Also, for homeowners who were not accepted for a trial modification, the number rose to a program total of 3,435 to 5,297.

Yet, homeowners may still have options through extension plans from the Making Home Affordable Program or proprietary modification plans, as reports indicate in-house programs are seeing a greater deal of success in federal modification initiatives. However, homeowners must understand that servicers like Bank of America, among many others, have also received numerous complaints from homeowners about processing problems, documentation, and the affordability of their home loan modification payment, so these programs are not a guarantee to help struggling homeowners avoid either foreclosure or bankruptcy.

Regardless, homeowners are being prompted to contact their servicer or an MHA housing counselor who may be able to help them find more affordability in their home loan payments or could guide them through the modification program so that less difficulties arise. There have been issues related to homeowners defaulting or redefaulting after they have been offered a modification, and in-house programs have reportedly seen an overall higher number of redefaults despite offering a greater number of home loan modification plans.

Despite these troubles related to the modification program, homeowners are still being asked to explore these plans as there are programs to help homeowners who may be in an underwater mortgage, who may be unemployed, or even those who may have a second lien on their home that has caused their mortgage payment to become problematic. While again no servicer has been perfect and the modification program in general has been heavily criticized, homeowners are still being urged to consider these options and address issues early so as to avoid any potential difficulties with their mortgage payments, as well as, save their home from foreclosure or bankruptcy.