Foreclosure Prevention

According to the Mortgage Bankers Association (MBA), foreclosures continue to soar while mortgage modification programs set up to help homeowners in trouble struggle to keep up. Currently, several million homeowners are either in loan default or nearing foreclosure. And thanks to consistent layoffs, more problem mortgages are likely to find their way back in lenders' hands to manage in the coming months.

The Hope Now Alliance, a mortgage industry trade group, reported in August 2009 that there were 3.3 million homeowners 60 days or more late on their mortgage payments. The group runs a hotline for troubled homeowners and is said to receive upwards of 5,000 calls a day. But this only marks a portion of the homeowners that are really in trouble. Mortgage servicers have reported that only 50 percent of delinquent borrowers actually respond to offers of assistance.

Those who are asking for help, however, are flooding mortgage modification programs, leaving them with the fear that they won't be able to keep up. However, experts recommend requesting assistance no matter how busy mortgage modification programs may be.

Of course, it's good to understand the implications associated with a modification before diving in. For example, your credit score can take a 50- to 100-point hit with the modification, so if you only have a short-term financial issue, you might see if your lender can lower interest for a couple of months rather than permanently modify your loan.

The best approach to determine how you should manage your troubled home loan is to contact your lender, because the last thing you want is to add your name to the growing list of homeowners headed toward foreclosure.

Have you struggled with your mortgage payments? Did you seek the help of a mortgage loan modification program?

Obama's foreclosure prevention plan has saved the day for 12% of eligible borrowers who have been placed into trial modifications of the plan by mortgage servicers. According to a progress report released by the Treasury Department on Wednesday, 360,165 homeowners who were at least two months behind in their payments were given relief through August. These numbers have increased from only one month ago when just 235,247 borrowers, or 9%, were in trial modifications.

Originally, the Obama administration came under fire for theHome Affordable Modification plan'srocky start. However, it seems that the plan has found some grounding andis on track to meetitsoriginal goal of having 500,000 loan modifications under way by November 1, 2009. Overall, the $75 billion initiative is projected to help up to 4 million homeowners.

How can you qualify for the Home Affordable Modification plan? You must meet the following criteria:

• Your home must be your primary residence.
• The amount you owe on your first mortgage must be equal to or less than $729,750.
• You must be having trouble paying your mortgage due to a significantly-increased mortgage payment or reduction in your income since you received your current loan. A hardship that has increased your expenses also helps you qualify.
• You must have received your current mortgage loan before January 1, 2009.
• Your payment (including principal, interest, taxes, insurance, and homeowners dues) must be more than 31% of your current gross income.

Those who are qualified are put into three-month trial modifications before their adjustments is deemed final. If you meet the criteria, maybe Obama's plan can modify your loan too.

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