For many families and individuals, a home mortgage is their largest source of consumer debt. It is also likely to be the highest monthly payment they are responsible for making, and each month more and more homeowners fall behind on those payments. And many of those homeowners are under water on their home.
Underwater homeowners are people who owe more on their mortgage than the home is currently worth. For these individuals, the options for getting out of debt can seem bleak. But there are options, including loan modification.
Loan Modification Helps Homeowners Get Back on Track … If They Can Get One
Perhaps the most appealing option to underwater homeowners is a loan modification. Unfortunately, obtaining a loan modification is not an easy task.
According to the Chairman of the Orlando Regional Realtor Association board, Kathleen Gallagher McIver, Bank of America received 75,000 calls about loan modifications in just one month. This makes the first step toward a loan modification – beginning the conversation with the bank – incredibly difficult. However, experienced bankruptcy attorneys are able to help many people negotiate permanent modifications of their loans.
The Home Affordable Modification Program included in the federal stimulus has not had the results many people hoped for. In fact, half of the homeowners who participated in the program have since quit. And more than 500,000 homeowners were denied loan modifications in to begin with.
There is good news, though. The four-county Metro Orlando region saw a 65% increase in loan modifications during the second quarter of 2010 over the previous quarter.
Source: Seminole Chronicle, “Owners still struggle to pay off mortgages,” Gary Roberts 25 Aug 2010