Alternative Mortgage Payment Assistance Plans–Are They More Necessary For Banks Struggling To Reduce Foreclosures?

There are some concerns that alternative mortgage payment assistance programs, like private modifications, may need to be adjusted and be made more available if homeowners are unsuccessful at the federal foreclosure prevention initiative as there are some who are struggling to go beyond these modified home loan payment plans when it comes to finding foreclosure prevention. However, concerns have arisen related to these alternative options as private plans are seeing more results, in terms of the number of modifications that are being offered, but we have seen over the past months that homeowners are likely to default in these private plans at a higher number than in the federal modification program.

However, there are arguments that if servicers did alter their private mortgage assistance plans that payments could be more affordable and, even when opportunities from the federal mortgage modification program are unhelpful these homeowners would have a safety net that would not lead directly to problems like foreclosure, bankruptcy, or the need to use a short sale in cases where negative equity may be the problem. Yet, what some argue needs to be changed in the area of private modifications is better understanding what a homeowner can afford, as even specific qualifications and review processes within HAMP have led some homeowners to a modified mortgage payment agreement that is too expensive.

While there are many predictions that foreclosures will continue throughout 2011, what many officials hope will arise are not only alternative plans available to help homeowners refinance for more affordable payments but it’s hoped that these private modification plans will be adjusted to a point where the homeowners who are seeing a high rate of success at acquiring one of these payment plans will see the sustainability that is necessary to help not only homeowners but the housing market. As foreclosures remain a problem in terms of creating a backlog of homes and even devaluation in some areas, more stress is being made for servicers to avoid foreclosure in cases where some form of payment arrangement may be worked out, no matter if it will not be as profitable as a servicer has hoped.

In the end, both private and federal mortgage assistance plans have not been able to modify home loan payments to the point where every homeowner avoids defaulting once again, but there are more concerns in the area of private modifications since there is a higher rate of homeowners falling back into a position of financial distress, meaning more homeowners are missing payments after these plans are offered. While servicers are able to structure their modification program through in-house policies, the sustainability of modifications in general is something that needs to be addressed as issues like qualifying for modified home loans or refinancing plans do still hinder some homeowners from getting the help they need, but it’s hoped that in this area of proprietary modification plans homeowners may see not only more success when it comes to getting a modified payment but being able to afford these payments in the long run.