Real Estate Pro Articles

Persistence: Key to Avoid Foreclosure and Bankruptcy Houses

[Valid RSS feed]  Category Rss Feed -
By : John Cutts    99 or more times read
Many struggling homeowners who want to save their properties from becoming foreclosure and bankruptcy houses were given hope with the Obama Administration's loan modification or refinancing program.

But since the inception of the program early this year, it failed to meet its target number of modifications. The major complaint of many distressed homeowners is the lengthy process. Some of them even complained that by the time any response has been made by lenders on their modification request, it is too late for them to save their properties from becoming foreclosure or bankruptcy houses.

At a meeting on the effectiveness of the Home Affordable Modification Program (HAMP) of the government, conducted in Philadelphia, Pennsylvania, officials of Freddie Mac, Fannie Mae and Treasury who are responsible for the program gave it an average progress rate.

According to industry experts, the federal program has some deficiencies that makes it ineffective for a great number of unemployed, struggling homeowners. Also alluded during the meeting are the structural problems of the federal program.

Struggling homeowners who applied for loan modifications which would give them 31 percent debt-to-income rate, said that the process usually takes about 3 months to complete. This is in contrast to what lenders would normally say, that the loan modification process takes only 2 and half months to complete.

Industry experts said that debt-to-income rate is not properly calculated by the support staff of many lenders. The Treasury has issued loan modification guidelines but industry experts doubt if they are binding to all servicers.

Experts believed that borrowers opted to have self-imposed delays for the reason that many of them do not know how to go through with the loan modification process, they do not know how to budget or even why they are in financial trouble and facing foreclosures.

They said that many applicants do not have the necessary skills to produce the required financial documents and necessary information. Under HAMP, the goal is to reduce the mortgage payment to just 31 percent of the monthly gross income of the borrower.

Some homeowners complained that their lenders did not apply their mortgage loans on the calculation of their debt-to-income. They believed that many loan modification applications were rejected due to incorrect calculation of debt-to-income rate, resulting to more foreclosure and bankruptcy houses.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

Related Articles

Print This Article
Add To Favorites




© All rights reserved to Real Estate Pro Articles