Federal Plan

Ok, the reinforcements have arrived with federal funding for loan workouts to keep borrowers in their homes.  But whose side on they on-homeowners or the banks?  The Home Affordable Loan Modification Plan or HAMP, was designed and implemented by the Treasury Department to help almost 5 million homeowners stay in their homes and avoid foreclosure.  This program is subsizided by almost $75 billion in TARP funds, and offered the first standardized and streamlined guidelines for loan workout options.  Finally, a light at the end of the tunnel for frustrated and hopeless homeowners!  Really?  Well, it hasn’t turned out quite like we thought-8 months into the program and only 728,000 borrowers have received temporary loan modifications.  Only a fraction of those have been made permanent-so what the problem?

The idea sounds good-formulate a standard program that all participating lenders must adhere to when considering a borrower for a loan modification.  But the reality is a little more complicated.  The good thing about a standardized program is that everyone is subject to the same guidelines for approval.  This takes alot of the guesswork out of figuring out just what the lenders want to see in order to approve a borrower for a loan workout.  The bad thing about a standardized program is that you need to fit into a little box of guidelines-if you don’t fit exactly then you are out.  A homeowner may be offered some other type of loan workout, but chances are it won’t be as affordable as the HAMP program.  On top of that, add a complicated formula for determining who qualifies and most homeowners are left out in the cold.

Just over $1.5 billion of the $75 billion allocated has been used.  If that was Cash for Clunkers it would have been gone long ago!  Homeowners still bear the biggest responsibility for completing a loan workout.  No wonder so few loan modifications have been completed. Let’s face it, the average homeowner does not understand how to prepare their application forms for their bank nor do they have the information necessary to make the minor adjustments to their budget that could mean the difference between denial and approval.  It is intimidating to complete a bunch of forms that disclose all of your financial information-especially if you don’t know just what you are supposed to be proving to your bank.  It is no surprise that frustrated homeowners were easily targeted by loan mod companies, attorneys and other third parties offering to “do it all for them”-but as we know, that was not the solution either.

Interesting question-Are the banks setting up homeowners for failure by not providing more one on one assistance with preparing financial statements, offering advice on how a budget can be adjusted to give the homeowner more of a chance for approval?  Every homeowner I know would be more than willing to cut out some of their expenses or take in a room mate if needed to qualify for a loan modification.  But if you don’t know or are not told that these are options to get approved, then how can you be expected to make these adjustments?

Of course the banks are blaming homeowners for not providing the right paperwork, or because homeowners do not respond quickly.  I don’t buy that-I have heard over and over again that borrowers are asked to send over the same paperwork many many times-it somehow gets lost in a big black hole at that bank.  So, eventually the homeowners get fed up and give up.  It David against Goliath-and Goliath has some pretty deep pockets and Federal funding on its side.

What is the answer to stop the flood of ongoing defaults and foreclosures?  It looks like homeowners are going to have to continue to be extremely proactive by learning the guidelines and diligently preparing their loan modification application so that at least they have a fighting chance of success.  No one is going to come to the rescue-not the Fed, not the banks and certainly not any third party charging thousands of dollars to cash strapped homeowners.  If you are willing to spend a few hours getting educated, and then be persistent and patient, you can be successful with your loan modification.  It’s not for the unmotivated-but when your home is on the line, being prepared and willing to fight is the option that works.

Fortunately, homeowners do not have to figure this out by themselves.  Get the help you need to prepare your own accurate and acceptable loan modification application. The Complete Loan Modification Guide kit is the best selling do-it-yourself system that takes the guess work out of preparing your financial statement, hardship letter and all of the required forms your lender needs. You get an easy to use software program-Loan Mod Quick App-as well as an easy to understand handbook with step by step directions.

Why take chances with your application? Simply input your unique financial information into the Loan Mod Quick App and it calculates it all for you! It couldn’t be easier! Visit myloanmodificationcenter.com and order today