Alternative Home Loan Modifications Directly From Servicers–Potential Benefits Outside Of HAMP For Homeowners

Some homeowners have been able to benefit from alternative home loan modification plans that are made directly from their servicer and there have been reports which state that these proprietary, modifications are being seen in greater numbers still than federal Home Affordable Modification Program efforts, which may be beneficial for homeowners who are struggling to make their mortgage payment. However, homeowners do need to be aware of certain aspects of these private modifications that may be in place so that they can better explore loss mitigation efforts that may be available directly from their servicer or alternative plans outside of modifications that may help a homeowner avoid the loss of their home.

Obviously, the benefits of these alternative home modifications are apparent in that they may potentially be able to help homeowners in a way that a federal modification does not consider because a servicer does not have to adhere to guidelines set by the federal government that homeowners must meet. While there have been increases in the number of federal home loan modifications made over the past months, these proprietary plans that come directly from a mortgage servicer may be more helpful for some as, once again, a homeowner who may be close to qualifying for a federal modification but might fall short could potentially be aided by these alternative plans and avoid foreclosure as a result.

Many servicers often used similar options that are available within the federal Home Affordable Modification Program, as some homeowners may get an interest rate reduction, term extension, or there are some banks that may offer a forbearance opportunity on a homeowner’s principle in cases where these individuals may have fallen behind but are now in a position where a modification may help or they are current on their payments presently. Homeowners who have fallen behind on their payments or who are in position where they have seen their income drop will require different options when it comes to these modifications since not every homeowner’s predicament will be similar to another’s, and because of this it may require that homeowners find different routes for foreclosure prevention.

Yet, some homeowners have fallen back into delinquency even when an alternative home loan modification has been offered, which has been problematic in the housing market since homeowners who may have gone through a federal modification application process, but were denied and turned to an alternative plan may have missed opportunities like mortgage payment forbearance, state-specific plans that could be helpful, or other opportunities that may have been in place to address their specific financial problems.

Homeowners do need to understand though, federal and proprietary, modifications are not the only opportunities that they may have, so exploring these alternatives like forbearance options or the Hardest Hit Fund may also benefit homeowners who are looking into these proprietary modification programs, but it needs to be remembered that homeowners are not guaranteed foreclosure prevention assistance, so it may be necessary to speak with a housing counselor or a representative from a homeowner’s mortgage service or so that they can get a better idea of what options their particular bank may be able to offer to meet their needs.