The number of private home loan modifications available directly from mortgage servicers through proprietary plans saw an increase in August, which follows a trend that we have seen over the past few months in terms of increases in this particular area for homeowners who are looking for alternate ways to pay their mortgage obligations but may not benefit from a federal assistance plan. Some servicers have focused more on these proprietary home loan modification initiatives but still continue to work with homeowners through the Making Home Affordable program and this has led to situations where homeowners feel they may benefit from these servicer-direct plans more so than attempting to qualify for a federal modification.
However, homeowners do need to be aware that, while private home loan modification programs may be helpful as an alternative, they are not a guaranteed fixed to a homeowner’s situation as there has been similar problems seen in both federal and private modification programs. As an example, homeowners are not always finding the most affordable payment plans on their home loan but have continued to see defaults increase in some areas within both the federal HAMP plan and these proprietary programs.
Homeowners are well aware of state plans and extension programs within HAMP but many are simply looking to get a reduced mortgage payment on their home loan, and this is where some of these initiatives may not be as helpful to some homeowners, as there are still qualifications that must be met even as we see more mortgage payment assistance opportunities available. Yet, homeowners may be in the position where their servicer is not working to provide proprietary modifications at as great a number as other banks, and in these instances of looking into state programs or how a particular extension plan within the federal Making Home Affordable plan will help could be necessary, as not all servicers seeing improvements in the proprietary modification arena.
The good news that homeowners can take away from this situation is that most of the major financial institutions that are working to prevent foreclosures do offer some form of alternative modification assistance or payment plans, but again, they may not always be best for a homeowner’s situation. Usually housing counselors will urge homeowners to begin addressing payment issues early so that if a federal modification program is unavailable they can look into these proprietary plans without doing a great deal of damage in their financial life, as the application process in these modification programs could take some time in certain cases, but there are still resources from the MHA program or that FHA that may better help homeowners explore potential solutions to their payment troubles.