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Delinquent Mortgages On The Rise Despite Obama Legislation

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Real Estate Broker/Owner with American Lighthouse Estates Inc. CABRE#01432680

Original content by Ilyce Glink

Obama’s Making Home Affordable Mortgage Loan Modification Program is helping some but delinquent mortgages are still on the rise as loan modifications are taking longer to complete.

Are mortgage lenders waiting to modify loans even under Obama's Making Home Affordable Loan Modification Plan because they’re hoping the loans will self-cure?

Historically, loans that are less than 30 days late will often “self-cure.” That’s the industry jargon term for a homeowner who figures out how to catch up on his or her mortgage payments and start payment them on time each month.

In fact, the majority of mortgages that are delinquent even up to 60 days will often self-cure. But once a mortgage is more than 90 days delinquent, few homeowners are able to catch up on their payments.

That’s why loan modifications originally targeted those homeowners who had fallen so far behind even with Obama's Making Home Affordable Loan Modification Plan. Once they’d fallen 90 or more days behind they’d never be able to catch up without some sort of help.

 

It also doesn’t help that the longer it takes to complete a loan modification, the more likely someone will lose a job, get divorced, get sick or have something else happen to dampen their earning prospects.

Loan modifications take time. In some cases months and months go by before borrowers get an answer from their lender. In spite of the best attempts under Obama's Making Home Affordable Loan Modification Plan, the process is still painfully slow.

What will fix the cure rate is helping people find jobs that pay them a decent wage, like building much-needed roads and bridges, or retraining them for a job of the future, perhaps in technology or a green industry.

That’s where a good chunk of the remaining stimulus money might need to go.


To read more about new surverys and the fate of mortgage loans, follow this link back to my website ThinkGlink.com.

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