The Treasury Department has stated that there were increases that had been seen in the area of delinquent mortgages homeowners are facing as of the second quarter of this year, which indicates that homeowners are not only missing payments on their home loan but may also be seeing trouble when a modification is also offered to help him avoid the loss of their homes through foreclosure. In some cases it is been stated that when modifications, as an example, are able to reduce a homeowner’s payment by at least 10% if not more, homeowners did see more positive results, but we have also recently heard that there are cases surrounding private modifications where homeowners are defaulting once again at a higher rate after being offered one of these modified home loan payments.
This has led some officials to question how homeowners who are being hindered by their mortgage payments, falling behind to the point of delinquency, and still seeking ways that they may avoid foreclosure are going to find any solutions if even modification programs or other loss prevention plans are not always helpful. Understandably, homeowners are in different situations as to why they become delinquent on their mortgage payment but this does not mean that all potential solutions that are currently available will necessarily help.
In the end, homeowners who have options for modification plans directly from their servicer or from a federal modification plan, opportunities from state-specific foreclosure prevention programs, and even refinancing opportunities that may stand to lower their mortgage rate and payment substantially do not benefit from these programs in all cases and are still seeking ways to find stability. We saw a few months into the modification program that unemployment was becoming more of a problem as long-term unemployed homeowners who may have been using their savings, unemployment insurance income, or income from other sources to make payments were falling into delinquency once more simply because those who are without a job cannot meet these modified payments.
It was because of this that programs like the federal unemployment forbearance program were offered as a solution, but questions remain as to whether more needs to be done in terms of reducing costs homeowners face within these plans. At delinquencies have increased in some areas, along with homeowners seeing more delinquencies in certain programs, there is the opinion that these plans must be altered in such a way that allows for more affordable options for the present time so that homeowners may be able to avoid the loss of their home, which would add only further difficulties to an already struggling housing market. Also, homeowners are looking to these federal and state programs to not only help him avoid delinquency but recover from periods where they have missed payments and now may owe a large sum on unpaid principal and interest that may not be affordable at the present time.