The Obama administration announced yesterday that it is going to try yet again to push lenders to assist struggling homeowners with loan modifications. Are they planning on doing something different? Is there some magic noose that they have around the lenders’ necks that they will tug a little tighter on? Or maybe they are going to promise the lenders extra dessert for being good?
Since the implementation of the Making Home Affordable Plan the administration has been trying to give lenders every incentive it can think of to push the program–they have offered financial incentives to the lenders that work with borrowers on approving modifications, and for accepting smaller loan payments in lieu of foreclosures. The result is that there seems to be a decent effort to get homeowners started on paperwork for modifications, but the follow through is lacking.
The newest figures claim that 14% of homeowners with mortgages are either behind on their payments or in the foreclosure process. This figure is a record for the ninth straight quarter, and there is no end in sight as unemployment (currently at over 10% nationally–a 26-year high) continues to force people from their homes. Furthermore, the unemployment problem makes the program virtually useless, as it was implemented before the spike in unemployment and focused on the market as it stood six months ago. What to do?
One way the administration plans to push lenders is to delay the payments to lenders until AFTER the loan modifications have been made permanent. They also plan to “highlight” loan companies that are lacking in follow-through (kind of like a spotlight on the bad guys…not good publicity for their business).
It will be interesting to see if these new tactics work. I will keep you posted as to any updates–the full plan is to be announced tomorrow. For now, if you are one of the millions of homeowners struggling to get a loan modification I suggest you remember this advice:
1. Call a counselor: you can try HopeNow: (888)995-HOPE or www.HopeNow.com.
2. Call your lender OVER AND OVER.
3. Document everything in writing.
4. Keep pestering them and be vigilant–no one is going to take care of you but you.