Private home loan modifications have been one way that delinquent and troubled homeowners have been able to find alternatives to the federal modification initiative, as many servicers participating in these in-house home loan modification plans have been able to provide homeowners with another means of foreclosure prevention in cases where a Making Home Affordable home loan modification is unhelpful. However, there are both ups and downs in the area of proprietary home loan modifications, despite the fact that these plans can help homeowners prevent foreclosure, and according to reports, have outnumbered federal home loan modifications over the past months.
According to recent coverage from HousingWire.com, around 73,000 permanent modifications made in January were proprietary home loan modifications from participants in the Hope Now alliance and, again, these in-house modifications outnumbered federal modification plans that had been also offered to homeowners in distress. Understandably, the delinquent homeowners who are facing the loss of their home or individuals who simply may be in a financially difficult position in their life have been looking for ways to find more affordability in their home loan and modifications have been one of the more popular routes these individuals have taken to acquire affordability.
However, there are issues like negative equity that have prevented some homeowners from refinancing to a more affordable rate, which for homeowners who have qualified to traditionally refinance their home, has also been able to bring about lower monthly payments. Sadly, issues like underwater mortgages and unemployment have either created a situation where homeowners can no longer afford their mortgage payment or, again, cannot take steps like refinancing to find more affordability when they may have lost value on their home or simply do not qualify for a lower mortgage rate.
Yet, these proprietary home loan modifications do offer troubled homeowners the option to avoid foreclosure by finding a lower monthly mortgage payment for their particular home loan situation and many argue that these in-house modifications can be more easily worked out by financial institutions due to the fact that they are not adhering to federal guidelines and may be able to offer more flexibility when offering homeowners this form of assistance. However, proprietary home loan modifications have not been a guarantee when it comes to preventing foreclosure in all cases as homeowners do still find themselves in a position of delinquency and even defaulting once again even when a home loan modification has been made from an in-house plan directly from their servicer.
Understandably, homeowners are still frustrated with various banks when it comes to not only federal modification practices but these in-house initiatives as well, so homeowners may have to explore further alternative options to foreclosure like programs from the Hardest Hit Fund or extension plans from HAMP. Yet, homeowners do still have these proprietary modification options as many major financial institutions are in the Hope Now network and could offer homeowners a more one on one modification plan if a federal foreclosure prevention option is unhelpful for their particular situation.