Government Loan Modification

The United States government, in an effort to help homeowners in America escape foreclosure, has granted $75 billion in aid through a program aimed at the modification of loans. Mortgages for millions of American families will have dramatically lower payments per month, allowing them to remain in their homes. The guidelines for qualifying for this program, set out here, are fairly simple.

Months ago, the federal government put into place a series of programs, voluntary for the small number of banks participating in them, that were designed to help homeowners behind in their mortgages work with their lenders to modify the terms of their loans. While never being optimistic about these plans, I conjectured that if the publicity surrounding them helped make more homeowners aware about such alternatives to foreclosure, one of the main problems would have been addressed.

Although the loan program is a voluntary one, certain financial bonuses, which include $1500 for mortgaging institutions and $500 for service agencies, are expected to encourage participation among the greater part of lending banks and service agencies. Bonuses will also be granted to the homeowners. Mortgage holders who are consistent and prompt with their modified payments will be given a yearly incentive which will add up to $5000 at the close of the fifth year.

High demand may lead to delays

You do not have to be behind on your mortgage payments to qualify for the program, but may face longer delays in getting approved than borrowers in more serious financial straits. Demand for the program has been high and many lenders are focusing first on customers who have fallen behind. Borrowers who are current on their payments may also find a better option in refinancing, rather than modifying, their loan under MHA, for which there are different guidelines.

What is this results in, though, is a consolidation of assets and financial power in the hands of the banks. Homeowner will lose their homes in large numbers and local governments will face insolvency and budget crises as property tax revenues fall. Small and medium size banks will also face collapse due to the mortgage fallout, while large banks gobble up the smaller ones or government takes them over through the FDIC. The machine of the corporatocracy continues to roll over the American people.

Government home loan modification programs are an essential way to save your home from foreclosure. Foreclosure is going to have a negative effect on the credit rating and contribute to the financial ruin of your family. Losing your largest asset, the home, can prevent financial stability for years to come. Taking all measures possible to reduce the chances of foreclosure is a responsibility that every homeowner should take seriously.