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Bank Foreclosed Homes Overtake Loan Modifications

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By : John Cutts    99 or more times read
Early this year, President Barack Obama launched the Home Affordable Modification Program (HAMP) aimed at helping as many as 9 million homeowners avoid foreclosures. The initiative is backed by the $50 billion grant from the bailout fund of the financial industry.

So far, the program has failed to make a dent on the spreading foreclosure problem in the country. Industry experts pointed out that the impact of HAMP is far behind the original projections of the Obama Administration to modify 4 million troubled loans and refinance 5 million mortgages.

Counties in North Florida can attest to the slow progress of the HAMP as the number of bank foreclosed homes greatly outnumbered loan modification figures. Early data on the HAMP status showed that the first batch of homeowners who applied for the loan modification program on April 1, 2009 has yet to complete the process. Local bankers believed that the number of loan modifications will increase after borrowers finish the probation period.

According to court records, nearly 1,063 loans were modified in the counties of Clay, Duval, St, Johns and Nassau as of July 21. The figures included completed and filed loan modification documents.

Vystar Credit Union leads the most number of loans modified with 8 percent out of the over 1,000 mortgage modifications. VyStar President Terry West said that a mortgage modification is handled on a case-by-case basis. He added that when credit union members are having difficulty paying their mortgages, VyStar examines the causes of their financial problem and tries to determine if the situation is temporary or not.

He pointed out that even if the troubled loans are modified, homeowners still need money to ensure that they remain in their homes.

But some distressed homeowners are complaining on the difficulty of getting help from lenders despite the voluntary compliance of banks with HAMP. Many large banks such as JPMorgan Chase have worked with the U.S. Department of Treasury since the programís inception. Some of these banks have even established their in-house initiatives to boost their loan modification efforts.

However, some homeowners are facing difficulties of obtaining the funds despite meeting the requirements because banks are swamped with the large volume of people who want to save their properties from foreclosures.

To avail of HAMP, borrowers are required to have mortgage payments not more than 31 percent of their total gross income, must be owner-occupant of the distressed properties and have an outstanding loan balance of not more than $729,500.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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