For homeowners who are looking for assistance on their mortgage payments, many have often turned to the federal modification plan as a way to help them find the affordability they need as many of the nation’s top mortgage servicers are participating in this program to help homeowners find a lower monthly payment through either rate reductions, term extensions, or other techniques. Yet, some mortgage servicers may be able to offer alternative modifications in a way that will better serve their homeowners and according to recent Treasury Department reports, the total number of these alternative payment plans that have been offered after homeowners have been unsuccessful at a federal modification program did see some positive results for certain homeowners.
As an example, the homeowners who were denied a trial home loan assistance plan from HAMP did see an increase in the number of alternative modifications that had been offered by a little over 3,000 between May and June, but there were decreases seen in this area for homeowners who had their trial canceled. Obviously, not all homeowners benefit from these types of assistance programs, but it is helpful for some homeowners to know that there are positions to which they can fall back if a primary federal assistance plan is unhelpful for their particular needs.
Understandably, homeowners who work directly with their servicer to implement these alternative plans may be able to bypass certain qualification requirements that would otherwise prevent them from seeking assistance and avoid foreclosure as a result. Over the past months we have seen increases and positive reports coming from these proprietary plans and alternative modifications, but homeowners are not always benefiting from these programs despite the fact that some servicers have used them more than federal mortgage assistance plans.
Issues related to homeowners finding themselves in a position where they cannot pay even a modified payment on their home loan have sometimes fallen back into position where they have defaulted or missed payments even when one of these alternative opportunities is made available. Homeowners have also seen this problem in the federal assistance program, and in instances where homeowners that may have a trial program offered for their situation, missing payments and defaulting will obviously disqualify them from further federal assistance in this plan.
Yet, in some instances, homeowners have opted to work directly with their mortgage servicer rather than reapply for a federal modification plan on their home loan payments as these private plans, which again offer alternatives to this federal program, may be more beneficial as a homeowner’s situation might warrant that loan payment options be tailored in a specific way that can potentially be unavailable in HAMP. Homeowners do need to remember though, there are options beyond these simple modified home loan payment programs that can be used to their advantage, but in some cases homeowners have to go beyond their primary or alternative modified payment programs to find the best foreclosure prevention option for their situation.