Reports released here in the month of September regarding the second lien home loan modification program have shown some positive results which may be good news for homeowners who are pursuing this particular type of home loan assistance plan. Obviously, many of the major banks participating in the federal Making Home Affordable Program also offer second lien home loan modification assistance, but there have been questions as to whether this program is helping homeowners when it comes to the overall affordability they have on their mortgage obligations. Some homeowners have been given a home loan modification plan on their primary mortgage but due to their second home loan are unable to benefit from this reduced payment plan, but as a result these second lien modifications were started and some are even offering full extinguishment of a homeowners second mortgage.
The report released here in the early part of this month tracks data through July, and between June and July the number of second lien modifications started by many of the top servicers in the federal Making Home Affordable Program increased from 33,715 in June to 37,466 in July. There was also an increase of almost 1,000 of these home loans that offered a full extinguishment option, and almost 3,000 of these modified home loans offered a partial extinguishment.
What homeowners may face when a second lien is present is usually a higher overall mortgage payment each month, which again can be problematic even when a modification on a primary home loan is available. It’s because of the fact that some homeowners were still defaulting on their mortgage payment even after a primary modification was offered that servicers have begun the process of offering second lien modification programs, but there are again options available for homeowners to have their second lien extinguished if they meet certain qualifications, and this would obviously be incredibly helpful for homeowners struggling financially.
Homeowners should be aware that many servicers often require that a homeowner qualify for a federal home loan modification plan before even being considered for a second lien modification, which is a task in and of itself, so homeowners should be aware that when a primary and secondary mortgage happens to be causing problems they should take action as quickly as they can so that they may be able to explore all modification initiatives that may be available. Also, homeowners do have the option of speaking with housing counselors or maybe even benefiting from alternative modification efforts directly from their servicer, so there isn’t a lack of options available, but not all homeowners may qualify for certain plans.
As a result, homeowners must make sure they look at not only federal and servicer-direct options, but plans that may be available from state programs as well. Homeowners are in a position now where multiple assistance plans are in place but these options are not always easy to qualify for and may be limited in some areas.