Government To Monitor Lenders More Closely In Loan Modification Progress

In a method to get a more transparent picture of how lenders are performing on foreclosure

prevention, the government will insert some additional new guidelines. The president's loan modification program known as "Making Home Affordable", started with roadblocks and is coming under scrutiny as to how effective it really is for the more than half a million borrowers who signed up for it. Some complain they are not getting the assistance and believe they qualify and end up using a loan modification company.

Borrowers are required to make three consecutive payments from the loan modification trial period and give thorough documentation to make into a permanent loan modification. A government report discovered that less than one-percent of eligible borrowers got into a permanent modification status.

The measure of success of the "making home affordable" program is validated by the number of conversions of the trial modifications to permanent, which the administration feels will at some point assist up to 4 million applicants. If the lenders help the homeowners, they will be compensated under the program, but do not get their payments until the modifications are finalized.

A rising section of foreclosure occurring are from unemployed homeowners. The government's program needs to show evidence that it addresses this area too. Borrowers with small or zero income are presented with less choices to keep their home. It has been speculated and soon to be confirmed And government officials are set to announce rules as soon as this week whereby borrowers will be allowed to sell their homes for less than their current mortgage debt, which is called a short sale. Lenders will receive money for participating in this program as well.

It is evident that lenders are lagging behind in the process in approving loan modifications and the Obama administration will step up efforts and see more transparent reports of how banks are dealing with applicants. Some of the big lenders are being labeled as guilty of bogging down the process and not being of enough help for homeowners in dire need. Hopefully this will rectify the problem.

As an alternative, a homeowner can always work with a loan modification attorney or loan modification company to get quicker results. Although, most of these methods require a payment, some do accept payment afterwards or have a guarantee if your loan is not modified there is a small processing fee or no fee at all. The bottom line is homeowners need multiple ways to keep their home.

by: Ray Heinson

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