Modifications And Forgiveness On Second Liens See Improvement In HAMP–How Second Mortgages Are Made More Affordable

During the life of the federal Making Home Affordable Program many homeowners have had trouble sustaining even modified mortgage payments due to the fact that they may have a second lien in place which could be a hindrance to their affordability needs, but thanks to modifications that are offered on these second mortgages, there are homeowners who are seeing more positive results when it comes to dealing with their overall home loan debt. Yet, reports that were released in August from the Treasury Department showed that there are some positive numbers being seen specifically in the area of the second lien modifications, and as a result homeowners are able to find more affordability on their home loan payment when one of these second mortgages is in place and a primary modification isn’t enough.

Also, there are reports that the number of full second lien extinguishments that have been tracked increased between May and June, as the report released here in August tracked data through the month of June 2011. Past reports, specifically reports through the month of May indicated that there were 1524 second lien modifications that involved a full extinguishment, but that number increased to 2564 in June. We can speculate why this may be the case for homeowners dealing with second mortgages, as some banks are seeing problems related to foreclosures that are leaving a great deal of inventory on their books, which equates to homes simply sitting empty.

Some of these financial institutions are attempting to either work with homeowners to short sell their home, meaning they find a buyer even if the home is in a negative equity position, or some of these homeowners are getting more attention from their lender recently since the number of buyers that are currently in the housing market are not nearly enough to pick up the slack, in terms of the empty homes that need to be filled before housing can continue to recover.

Yet, homeowners who have faced a second mortgage on their home have often felt that a primary modification may not do enough to help them and there were some problems with investors banks had to overcome in the past when it came to dealing with either primary or secondary mortgage principal forgiveness. Luckily though, these extinguishments of second mortgages are seeing an increase, which is obviously going to be helpful for a variety of homeowners who may be suffering from different financial distresses that have prevented them from paying their mortgage in full.

Also, the number of active second lien modifications that are in place increased from 27,105 in May to 30,863 in June, and this number coupled with the fact that permanent modifications on primary home loans have also increased with many servicers may indicate that more homeowners are seeing success when it comes to getting these reduced payments. Keep in mind though, homeowners are not guaranteed help through these initiatives and some homeowners do still fall into further delinquency or face foreclosure as a result of their situation being too severe or such that even modifications will not help. However, officials want homeowners to keep these the second lien modifications in mind if they are looking to prevent foreclosure and a second home loan may be hindering this goal.