Alternative Home Loan Modification Payment Plans–Recent Troubles Homeowners Have Faced With Proprietary Programs

Home loan modification assistance through alternative payment plans made directly from mortgage servicers has been one route that some homeowners have successfully used in order to prevent foreclosure on their home by acquiring a more affordable monthly payment. Obviously, when it comes to helping homeowners avoid foreclosure, many of the major financial institutions working within the Home Affordable Modification Program are offering these alternative plans, as well as a variety of other assistance options that may be held for homeowners who are struggling to make financial ends meet, but there are still problems that homeowners have faced and, according to recent reports, some have continued to default even after a modification plans have been made.

Numerous servicers have been in a position where they have seen homeowners redefault on their mortgage payment when a homeowner’s modification plan was in place, but there have been some banks, like Citigroup, who reported that in over two years of private home loan modifications, around one quarter of homeowners have defaulted once again after being accepted for one of these particular types of modification plans. Obviously, there are some homeowners who are unable to qualify for the federal home loan modification program and there is hope for even these individuals as proprietary home loan modification plans are able to better tailor a modification agreement to meet a homeowner’s needs rather than keeping them in a position where they must adhere to federal guidelines for a modification.

However, there have been homeowners who complained that even when a private home loan modification is offered, sometimes the payments are simply too difficult and, as a result, homeowners are finding themselves in a position where they missed payments once again and are now facing foreclosure once more. While this is the case for some who may have various factors leading to their inability to make their own loan payment, homeowners need to understand that modifications are not the only route they have when it comes to keeping their home.

Understandably, lower mortgage payments from modifications are quite helpful for homeowners who may have seen financial setbacks due to unemployment or health related issues, but homeowners need to know that servicers like Citigroup and other financial institutions all offer extension programs that may be able to help homeowners who are unemployed, underwater, or there are some state-specific plans which have been reported on for months that can help homeowners address issues like there mortgage payment. Some of these plans may offer payment reductions while others offer homeowners a subsidy or a dischargeable loan to meet their mortgage payment for a set period of time, so homeowners who are finding that mortgage modification payments are difficult to make might be in a position where, if they contact their state housing agency or even a free housing counselor made available from HAMP, solutions outside of these private modifications or federal mortgage modification plans could be available.