For one thing, the mortgage companies would rather not do the paperwork required to do a loan modification that will net them less money in the long and the short run. Now to the average person this seems stupid. It would seem logical that it is in their best interest to restructure the loan and get something rather than foreclosing on it and getting less than nothing and have to wait a long time for a possible resale of the foreclosures.
Fortunately the Obama administration is getting ready to knock some heads around and get things working the way it was meant to be working from the onset.
The truth here is that foreclosed homes do absolutely nothing positive. They hurt the value of the homes that are near them that are not in foreclosure. They stagnate the local economy. They become an eyesore and a place for crime to grow and thrive.
All of this could and would be easily avoided by simply following the guidelines that were already laid down by the federal government. The new guidelines that are being unveiled and set forth are tougher and will have a much greater impact on what can and will happen in the loan modification arena.
The loop hole that the mortgage companies have used is that the initial undertaking of the modification program puts the homeowner on a probationary period of three months. The problem is that after that initial three month period fewer than a quarter of one percent of those loans actually became converted into the full permanent modification.
The feds are looking into the situation and are going to hold these people to a stricter standard, which hopefully will result in more long term modifications. There is also the possibility that these companies can face monetary fines if they are not complying.
Time will tell whether the new ideas will actually be effective but if they are able to do what they claim to be doing it will be a welcome sight to many suffering homeowners in the United States. Things should start to become evident shortly after the first of the year.
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