Homeowners who are in a situation where they have attempted to find lower payments on their mortgage may find that some options for mortgage assistance is not available, as we have seen in monthly Treasury Department reports showing that there are homeowners who are denied assistance through the federal modification program, but in cases where homeowners may be facing negative equity as well, or may simply not qualify for these modifications, short sale and deed in lieu of foreclosure plans have been offered after a denial. Yet, questions have arisen over how beneficial these alternatives to foreclosure may be, despite the fact that there are some homeowners seeking out these options for their situation.
However, according to reports from the federal modification program, the program total for the top servicers within HAMP saw an increase in the deed in lieu of foreclosure plans and short sell options between May and June as homeowners whose trial modification was canceled saw an increase of almost 3,000 of these offers made available, while homeowners not accepted for a trial modification saw an increase of almost 10,000 in terms of the totals being tracked in this area.
Understandably, some homeowners feel that these options are more beneficial than resigning themselves to foreclosure, simply because it could help some families transition from a situation that is unaffordable, in terms of their home loan obligation, and by selling their home at a loss will be free and clear of any money owed to their lender. This can be helpful during times where distress like negative equity or even unemployment had arisen, but some arguments are still being made that homeowners should avoid turning to these options primarily, as there are still ways to avoid the loss of one’s home entirely.
Homeowners do need to be aware that there could be adverse effects on their credit score as well simply because this may be seen in a similar light as someone who settles the debt for less than they had originally owed. While there are some servicers who are working with homeowners to help them complete options like short sales, homeowners do need to keep in mind this could negatively impact their credit.
It has been the case though, some homeowners are simply not in a position where they are primarily concerned about their financial life, in terms of their credit score, as some men and women are simply trying to make ends meet, payoff multiple debt obligations, or overcome joblessness and may feel that getting an opportunity to participate in a short sale or a deed in lieu program will be best for their current situation. Yet, homeowners do need to understand that there are resources available to help them look at their financial situation, as housing counselors and similar assistance resources are still being stressed to homeowners in the hopes that troubled homeowners will use this assistance opportunity to look at how they may not only benefit from mortgage aid currently available but potentially find debt relief in other areas and avoid the loss of their home.