Trends In Loan Modification 2010: What To Expect
In March 2009, President Obama launched his MHA program: Make Home Affordable modification plan. The purpose of this plan is to help distressed homeowners manage their monthly mortgage payments and avoid facing foreclosure. Since then, hundreds of thousands of homeowners have been able to successfully apply loan modifications to their mortgage loans. However, this only serves as a small dent in the huge and ever growing number of homeowners facing foreclosure in this country.
What's in store for loan modification 2010?
It's hard to say exactly, but experts from the Federal Housing Finance Agency predict that loan modifications in 2010 will continue to increase, and more modifications will pass from the trial stage to the permanent stage. Currently there are over 700,000 loan modifications underway, but only 31,000 of those have passed through the trial stage and become permanent. For those whose loan modifications are complete, they face monthly mortgage payments lowered by 20% on average.
Obama's loan modification plan works by lowering the monthly mortgage payment to less than 31% of the borrower's total monthly income. First the interest is lowered as much as it needs to be, down to 2% at the most - if this is not enough to lower the payment to 31%, the terms of the loan are extended to 40 years. Banks that engage in the program are to receive cash incentives - $1000 initially, as well as $1000 per year up to three years, assuming the borrower continues to make timely payments. The borrower will also get $1000 knocked off the principle for each year they pay on time.
The Make Home Affordable plan relies on homeowners to stay in their homes as long as they can afford to make the payments. It also relies on banks to actively engage in the program and not be stingy or difficult with the borrowers.
Although the program appears to be working for many, banks are generally slow to act on this program, and many homeowners report that the process of organizing and filing for a loan modification is monumental. However, the risk a homeowner takes by not applying for a loan modification in 2010 can be immense, and as a result, foreclosure may be unavoidable.
Loan modification 2010 can be made less difficult and time-consuming by hiring a loan modification company to put together all the paperwork and offer expert advice. For a layman attempting to put together a 2010 loan modification, it can be incredibly complicated and the rate of failure is high. A loan modification company will ensure that the applications are properly organized, in the right order. They can also tell you what to expect given your particular circumstances, and what other options you may have in order to prevent foreclosure.
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