Chicago Relocation

Are Loan Modifications Working?

February 13, 2013

Filed Under
Credit,housing recovery
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John D’Ambrogio

With federal loan modifications in place for homeowners who are in danger of foreclosure as well as for homeowners who are current on their mortgages but unable to refinance or get ahead of what they owe due to declining property values, many real estate and financial experts are taking a hard look at whether these programs are working. While there are still some difficulties to work out, loan modification remains a solid benefit to people who need help with their mortgages. Many borrowers have taken advantage of federal programs such as HAMP (Home Affordable Modification Program), and taken the initiative to work directly with their banks and lenders to modify or reset their mortgages. The process is not simple, but the end result is often satisfaction for both the homeowner and the lender.

One problem with home modifications that can easily be rectified is communication. Many homeowners who feel frustrated with their mortgages don’t even realize they can qualify for a modification. If they are behind on their mortgage payments, they are probably avoiding phone calls from the lender instead of reaching out to find a solution. Once they are willing to pick up the phone and discuss the options, many homeowners realize there is help available, and a foreclosure or a strategic default is not always necessary. Another communication problem might be that homeowners who are faithfully making mortgage payments but worrying about the value of their investment might not realize that they could be eligible for help too. A short term financial hardship does not have to mean an end to home ownership. Talking to the bank is the first step in exploring modification prospects.

There is still a lot of negative equity in the housing market. Even with a loan modification, continuing to pay on your mortgage might seem like an exercise in futility. However, smart homeowners are watching the real estate market slowly tick upwards. We might not be in the throes of a full and sudden recovery, but the home values and prices are trending up, and interest rates remain at a historically low level. Therefore, getting a reasonable loan modification and sticking with your mortgage is a good investment, even if you are still a little upside down on your mortgage. In five or 10 years, experts predict the real estate market will be completely recovered, and your home will once again be one of the best investments you can make.

Without the federal HAMP program, there would be over half a million more foreclosed homes in the nation than there are now. This number cannot be ignored. While the federal government might have wanted to reach more people, the fact that so many homeowners have benefitted is good news. As people continue to seek help from their lenders, the number of secure homeowners will continue to increase, placing them in good financial standing as the market continues to expand and repair itself. The loan modification programs available now might not be perfect, but they are helping a substantial group of people, and keep families in their homes and fiscally solvent.


This post was written for Chicago Relocation by Stephen K. Hachey. Stephen is a Tampa real estate attorney specializing in loan modifications, short sales, foreclosures and much more.  He is also the owner of his own practice, the Law Offices of Stephen Hachey, PA.


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