Making Home Affordable Modification Alternatives Through Private Plans–Are Proprietary Plans Currently Helping Homeowners?

Homeowners who have been distressed in their mortgage or who are delinquent on their home loan payments have often turned to the Making Home Affordable Program as a way to find the help that they need through servicer efforts that may allow for a variety of modifications to offer more affordability. Some homeowners are still seeing options that allow for interest rate decreases, term extensions, and in limited cases there have been some principal reductions offered to homeowners in the hopes of winning foreclosure by offering more affordable payment options. However, there are further plans through private home loan modification efforts that have been helping homeowners find the foreclosure prevention they need, but questions over whether these proprietary plans are helpful have remained in place as new homeowners uninformed on these options have continued to surface.

As of the past few months, proprietary modification plans have reportedly been helpful when it comes to offering some homeowners the stability they need and affordable monthly payments on their home loan to avoid the loss of their property, and as recently as July there were reports that proprietary modifications were continuing seeing increases in terms of the number of homeowners who have been helped. These proprietary modification plans mirror the federal modification initiatives in some ways as they offer reduced principal options, can lower interest rate payments, and some homeowners are benefiting simply from allowing their servicer to transition them from an adjustable mortgage to a fixed-rate home loan.

Yet, homeowners do still have trouble when it comes to delinquency as there are men and women who do continue to fall behind on their modification payment in both the federal modification plan and these proprietary initiatives. While there are some indications that the number of delinquencies are not increasing at a severe rate, and in some cases may have dropped for certain banks, homeowners do need to realize that there are still problems when pursuing these proprietary plans, despite the fact that reports have shown more homeowners may be offered assistance through an in-house program rather than federal plans like HAMP.

The question of whether these proprietary programs are more helpful to homeowners than federal Making Home Affordable modifications will usually depend on the situation and servicer that is implementing one of these private options. Obviously, some homeowners have been greatly aided by these in-house efforts, but they are not always a guarantee when it comes to offering the affordability that a homeowner needs to sustain their mortgage payments in the long run, but as both federal and private modification plans continue to be offered and success has still been seen in terms of homeowners who are receiving permanent modification agreements, financial counselors often urged homeowners to explore these modification opportunities, and even alternatives that may be available directly from state housing agencies, if they find that paying their mortgage has become difficult due to factors like unemployment, cutbacks in their wages, or even health issues that may have impacted a homeowner’s financial life in a negative way.