Avoid Foreclosure By Opting For Federal Loan Modification Plan- A myth or Truth?
Obama’s making home affordable program has made millions of people dream about coming out of debt and paying back the mortgage loan after modification but it has provided no results. Infact people who have entered into a loan modification agreement has suffered for no fault of theirs and the mortgage service providers have been disinterested in solving this issue. Till the court resolves to decide on the matter taking a fair view of both contenders, it will be difficult to help those people regretting their decision of applying for Obama’s making home affordable program.
Obama’s making home affordable program was aimed at restoring homes of millions of people who were on the verge of bankruptcy and foreclosure or under severe debt crisis which was making it impossible for them to pay off the mortgage loan amount. The Obama’s Federal Loan Modification Program or HAMP was introduced in the month of April 2009 and the program intended to reduce mortgage payments of home owners to 31% of the total gross monthly income of an applicant for a period of five years. The intention behind the introduction of the Bank of America loan modification program was no doubt good and generous but the question is did it really work in the favor of home owners or worked against them?
The answer to the question is that the loan modification plan failed miserably and statistics prove that fact. For example if 1.3 million people opted for Federal loan modification program, only a one-third of them were actually approved for the loan modification program so that they could reduce their monthly mortgage payment through mortgage loan modification. Because of the lack of any solution for all those people who had applied for mortgage loan modification, permitted a trial plan of repayment and then were kept waiting for the final go ahead, there was no other option than filing lawsuits against the mortgage service providers. Most of these lawsuits have been dismissed by the courts.
The argument presented by the millions of people who have been granted a trial period and are still awaiting an approval on the federal loan modification program is that since a loan modification agreement has been signed between the two parties that is the debtor and the mortgage servicer, both sides ought to keep their promises and deliver on time. If the applicant has already provided all the requisite documents and followed all the rules and conditions stated by the mortgage service provider then there should not be any reason by the loan modification agreement is been overlooked and the applicants request for loan modification is been rejected. However, the argument provided by the mortgage service providers like Bank of America is that they are not bound by the contract and the decision to approve the federal loan modification program is completely up to them.
What these mortgage service providers do not understand is that once the applicant has decided to go ahead with a Federal Home Loan Modification Program and entered into the trial plan, it will be further difficult for those people to go back to their first payment plan if their mortgage service provider decides to reject their application. Since the loan modification agreement stated that the applicant has to enter the trial period immediately after submitting all the relevant documents, the home owner gets more into debt after following the trial plan and then getting rejected for the loan modification. This has even led to the mortgage service providers foreclosing the home they were actually supposed to save.Obama’s making home affordable program was aimed at restoring homes of millions of people who were on the verge of bankruptcy and foreclosure or under severe debt crisis which was making it impossible for them to pay off the mortgage loan amount.
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