home loan modification myths circulating during this time of economical difficulty
Everyone is talking about home loan modification. Even though this has always been a
option for homeowners struggling to pay their mortgages, the process of renegotiating
the terms of your loan and having it adjusted by the bank or lending institution, is much
more commonplace today. Even so, there are still many myths and misconceptions
about home loan modification.
Since the President's new Making Home Affordable (MHA) plan has been introduced,
there is now an understandable series of steps lenders must follow before granting
home modification loans. There is $75 billion set aside for the Homeowner Stability
Initiative that is to be used for loan modifications between March 4, 2009 and
December 31, 2012
Lenders participating in this program are paid money to adjust your loan and this
incentive makes a modified loan a much better deal than foreclosure or something else.
Through this method, the MHA hopes to help 4-5 million homeowners get back on their
feet financially and keep their homes.
There is still a lot of false information about the MHA plan. Some people think that
participation is mandatory and lenders are being forced into the plan. This is not true,
there is a clean set of procedures for modifying loans and the plan does give lenders
incentives to work out modifications, but no lender must participate.
The bank has to decide if a modified loan will be more profitable than foreclosing and
they will choose the option that gives them the most profit. Foreclosure is a very
expensive, lengthy, unprofitable process for lenders. With the recent incentive
payments offered by the MHA plan, lenders usually decide that they would rather
modify a loan than proceed with foreclosure.
Another common misunderstanding is that the Homeowner Stability Initiative plan will
help speculators and house flippers. This is also false. To qualify for a loan
modification in the MHA plan, the homeowner must be living in the home to which the
mortgage applies. This will be checked. Vacant, condemned, investment properties and
second homes are not eligible.
There are a lot of home loan modification myths circulating during this time of
economical difficulty. The MHA plan is new and people have yet to learn about it. Learn
the facts and understand this loan modification plan.
Learn all you can about home loan modifications and don't let false information keep
you from applying for this new program. You can avoid foreclosure and lower your