New information released as part of the Making Home Affordable program has given us some insight into private home modifications that may be an alternative to federal HAMP modification initiatives that are being used by many major banks to aid homeowners in need. What this means is that there are homeowners who might have the opportunity to pursue a private mortgage modification program directly from their bank rather than a federal modification, which may be just out of their reach or, in some areas, do not allow for certain homeowners to participate due to qualification restrictions.
Yet, we’ve seen in the July report of the Making Home Affordable Program that the number of portfolio modifications and private modifications, meaning the types of investors that have allowed these modifications to take place, between June and July as portfolio modifications rose from a total of 116,824 to 119,177. Also, modifications from private investment sources increased from a little over 247,000 to over 249,000. Also, there have been reports that these proprietary modifications increased in July, which may be a positive sign for homeowners who are looking for aid from these alternative plans.
Keeping track of this data can be difficult for some homeowners due to the fact that these are servicer-sponsored endeavors in many cases, particularly when we speak of proprietary modification plans. Understandably, the investors who hold a mortgage may have a say in whether a servicer pursues foreclosure or allows a modification but in cases where a homeowner may benefit from foreclosure prevention assistance and payment reduction plans, as a way to correct a problematic situation where foreclosure is avoidable, it may be easier for some homeowners to pursue these alternative plans.
However, we have seen differences in how many servicers are using these alternative modification plans, due to the fact that there are simply some banks that may be more willing to offer homeowners a private modification plan than others, and this can be troubling for homeowners who may not qualify for a Making Home Affordable modification. Yet, homeowners can explore not only modification programs from both federal and private sources but there are still numerous foreclosure prevention plans which servicers are using as a way to help homeowners in need, so understanding that modifications are not the only option for keeping a home is going to help homeowners who may feel that there is little hope left for their situation.
Keep in mind though, not all banks are willing to offer homeowners a modification but may opt for a short sale or deed in lieu of foreclosure program if it is deemed that a homeowner is unlikely to see success in one of these loss prevention plans, but even in states where high levels of unemployment have been a problem there are programs directly from state housing agencies that may offer aid to homeowners by paying their mortgage for a set period of time or there are federal plans that may offer homeowners forbearance if unemployment is a problem. Yet, homeowners must make contact with their servicer early to make sure that they can look into not only federal modification plans but alternative foreclosure prevention programs as well, due to the fact that pursuing a program that may not be as beneficial for a homeowner has another could potentially create a situation where a homeowner’s financial life sees setbacks due to these delayed affordability options.