During the height of the recession, homeowners explored various options for keeping their homes and avoiding foreclosures. One option that gained steam and helped many in Florida was the ability to get approval for a loan modification. Before pursuing that route, a homeowner should understand the statistics, glitches and other options, like bankruptcy, that may work out better in certain cases.
New numbers reveal the path to mortgage loan modification has been difficult for a majority of the homeowners who applied. It has been estimated that 72 percent of applications have been rejected. One bank in particular had a rejection rate of 87 percent. The banks have fired back by stating that many borrowers did not complete paperwork correctly or that homeowners did not make the first payment once approved.
Some homeowners tell a different story and say the applications and process in general was mishandled in a lot of cases. Some tell of having to resubmit documents multiple times or having to correct or disprove misinformation. This misinformation includes incorrect addresses, marital status and income, all of which needs to be precisely documented for a modification to go through.
The disputes and rejections making the news when it comes to how the loan modification program has been handled has been a cause of great concern for both banks and homeowners. While it may be an option that can help certain Florida homeowners keep a home and stay on top of a newly adjusted mortgage payment, others may find it leads to more financial troubles and delayed solutions. Filing for bankruptcy may be a more streamlined and cost-effective solution for some owners and should be explored further when financial situations have made making a mortgage payment difficult or impossible.
Source: The New York Times, “A Slack Lifeline for Drowning Homeowners“, Gretchen Morgenson, July 30, 2015