More mortgages are going underwater, and the government's modification program isn't working. Image from Wikimedia commons.
One of the first things the Obama administration did once in office was to offer a mortgage loan modification program called Make Home Affordable, or the Make Home Affordable Modification Program. The way it worked is that the government would work with the loan company to make a borrower’s mortgage more affordable. People who did get the modification on their loans also may be more likely to default on their loans anyway. More people have been dropped than have stayed in the program.
Tune in turn on drop out of mortgage mod
There were 96,025 people dropped from the program for this month, according to CNN Money. The number of people that have been dropped so far is 616,389, and the number of successful modifications is 434,717. That’s a failure rate of about 60 percent. That means a person is more likely to not have a successful outcome if they do enroll in the program. Essentially, that means that enrolled homeowners are ensuring a few extra pay days for loan lenders, possibly at the expense of the taxpayers.
Fewer people entering the program
A homeowner must first go through three trial months before a permanent modification can be made. According to the Wall Street Journal, there were 24,577 trial modifications granted for July, compared to 38,728 trial modifications in June. For homeowners who successfully completed the trial phase, 37,000 permanent modifications were granted in July compared to 51,205 permanent modifications in June. The program either needs more short term cash or fewer people can apply or need modification.
Not exactly a home run
There were also 12,912 people whose permanent modifications were canceled in July. But 272 had their permanent modification canceled because they paid off their mortgages. What this ultimately means is that the program has not been as successful as planned. This also means that if a person is thinking about entering into the program, they have around a 60 percent chance of failing if they get in.
Further Reading
I was offered a loan modification, but, instead of my monthy payments going down, they went up to almost to $500.00 more. I do not understand it. I paid a lawyer to help me do the modification and I now find myself doing the researcher rather that the lawyer I hired. There are 2 issues here. Can anyone help me please? I do not want to loose my home.