Mortgage Modifications: Is It Working?
According to multiple news sources, over 15 million homeowners in the US are upside-down in their current mortgage. This means that the homeowner owes more on their mortgage(s) than the home is actually worth at this time. With unemployment creeping upward and companies cutting back on salaries, performance increases, etc., there is most likely another wave of foreclosures coming.
The government’s attempt to entice lenders to modify these type mortgages so homeowners can avoid foreclosure isn’t really working. As of July, according to several reports, as little as 9% of the troubled homeowners in the US are receiving any assistance at all through mortgage modification with their lender. Lenders claim to be ‘overwhelmed’ by the number of people calling for assistance but the truth is more than likely closer to the fact that, in these tough ecconomic times, they don’t want the burden of more ‘tainted’ debt.
Delinquency rates on all forms of credit are rising at a rapid pace. The result, banks are continuing to clamp down on lending to businesses and consumers. According to Federal Reserve report, they plan to keep things tight for at least another year.
While persistence is key, according to those that have successfully negotiated a modification, it is time-consuming and fraught with frustration. Homeowners are only eligible if they are “at risk of imminent default.” If you think you need to pursue a mortgage modification, prepare before you call. You’ll need copies of tax returns, pay stubs, bank and savings accounts, a written explanation on why your mortgage is currently unaffordable and what event(s) caused your income to fall or your expenses to rise.