The Home Affordability Programme to Help Foreclosure Victims
There is hope that the Home Affordability Programme will be able to help foreclosure victims. One of the hopeful is a couple – Brad and Susan Green. They are pinning their hopes on the measure to help them keep their house in Waxahachie. The programme is about modifying loans. They have applied for help and are waiting for the green signal. Meanwhile they have lagged behind in their monthly mortgage commitments amounting to $1,266 since October 2008. Consequently the lender has started foreclosure proceedings against them.
Brad said, “I’m hoping that I qualify under the loan modification so that they will do something to help me lower my payments a little bit. I need to get my payment down to about $900, $1,000 a month. If I don’t get approved for a loan modification, it’s going to be 1-2-3, and my house is gone.”
The programme came into effect in March 2009 and it is included in the plans of Obama government to put aright the tottering economy by stabilizing the real estate market. The measure has two sides – modification of loans and refinancing of loans.
In loan modification the lender alters the terms of the current loan mainly by reducing interest rate and or increasing the time period of the loan. The target is to bring about a balance between the income of the borrower and the expenditure on housing loan.
Refinancing involves the clearing of a loan and getting another. Refinancing generally improves the terms of the loan with lower interest rates.
The borrowers are advised by experts and advocates that those who get an approval for loan modification should closely scrutinize the terms of the mortgage to see that this will actually be beneficial and affordable to and for them. Prior to the government programme many have managed to get modification that have turned out to be detrimental. This has led them to default again. The mortgage payments have often increased rather than decreased.
Andrew Loubert of NeighborWorks America said, “Over the last six months, there have been failed modifications where the lender will create a modification that’s convenient to the lender, but makes no sense for the homeowner.” He explains that when the borrower is say lagging behind four months in payment the lender wants cash to flow again. So he agrees to modification but tags on the due amount to the fag end of the loan. This causes the principal and thereby the interest to increase without helping the borrower at all. The so-called modification was just a white wash!
