Alternative Mortgage Modification Programs From In-House Plans–How Home Loans May Be Modified For Lower Payments

Certain homeowners who are looking at alternative home loan modification plans may be unsure of how these programs typically work, and since many of the modifications that are offered through proprietary programs may be different from one to another, depending on the mortgage servicer, there is some uncertainty as to whether these programs will be helpful for specific homeowners who may have been denied a federal modification plan. Yet, many of these modifications mirror the federal home loan assistance program which can offer a variety of opportunities for a homeowner to modify their mortgage for the purposes of gaining more affordability.

While these private, proprietary home loan plans have reportedly outnumbered federal modification assistance programs, this does not mean that they are going to be available for every homeowner nor is it a guarantee for a homeowner to avoid foreclosure if they fail to acquire a federal modification plan. However, some homeowners are aware that options like term extensions, rate reductions, and even forbearance options on a homeowner’s mortgage principal payments are just a few of the modified aspects of a home loan that may help homeowners, and have been used in the federal modification program in the past, but there are some homeowners who may see further actions in a proprietary modification.

Obviously, it will depend on a homeowner’s situation and their bank as to what opportunities are available but there are some homeowners who have seen reductions in not only their interest rate but their principal as well, as this has been an option that was made available to homeowners through the Making Home Affordable Program and specifically by certain banks also. There are some financial institutions that service these mortgages and offer modification plans that will differ on their approach to an in-house modification, but homeowners may again be able to benefit from principal reductions, interest rate reductions, or something as simple as a term extension, as the original intent of the federal Making Home Affordable modification initiative was to mainly help homeowners who were suffering due to having plans like an adjustable rate on their home loan and, due to financial setbacks, were unable to pay their mortgage. Some homeowners were able to modify their home loan into a fixed rate agreement, but since the complexities in the housing market have grown this has required that servicers take further action.

Yet, since there is nothing that is definite about the modification plans homeowners must make sure that they contact their servicer or even consult one of the Making Home Affordable housing counselors to see whether a modification will be right for their situation or if an alternative program outside of the modified home loan payment would be best. Again, homeowners may have seen a greater number of proprietary modifications being offered from their mortgage servicer, but there is still problems when it comes to homeowners being able to sustain these modified payments, and if homeowners do not take action quickly and explore all available options, there may be some who fall into delinquency once again and run the risk of facing foreclosure.