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Loan Modification Update

Real Estate Broker/Owner with Wyse Home Team Realty SL3192071

The most glaring misconception this past week is the loan modification reports of success from the Making Homes Affordable Program. While many homeowners are being given a temporary life line from this program, the root of the trouble is not being fully addressed.

Most modifications involve a lowering of interest rates for a given time which helps homeowners now. Unfortunately, the interest that is unpaid is often put on top of the loan, very similar to the negative amortization loans that were so popular a few years ago. Does it truly help a homeowner if their loan balance goes up each month?

An article on RealtyCheck details that only 5 homes in the program received principal reductions in the mortgage balance. What is worse? Unemployed homeowners that need help the most, are not eligible for the program. The Florida Realtors article on re-defaults has some very sobering statistics. An article from Yahoo Finance discusses current anti- foreclosure initiatives and feels that they do not fully address the problems ahead. While the program is helping, improved solutions are needed.

Daytona Beach Florida Listings


Charlie Ragonesi
AllMountainRealty.com - Big Canoe, GA
Homes - Big Canoe, Jasper, North Georgia Pros

Well help is help but as you note maybe the program needs some additional tweeking. I would rather not see govt rush in heavy handed but adjust going along. Now if they would do it ...

Oct 13, 2009 12:28 AM
Ron Wysocarski
Wyse Home Team Realty - Port Orange, FL
CEO, Pricing Specialist

we should always ask the question, "does this truly improve the homeowners situation?"

Oct 13, 2009 12:37 AM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Ron - Unless it is restructured, the program will never save the promised 7 - 9 million homeowners facing foreclosure.

Oct 13, 2009 01:13 AM
Steve, Joel & Steve A. Chain
Chain Real Estate Investments & Mortgage, Steve & Joel Chain - Cottonwood, CA

Ron,  If the bank does the mod ultimately they are just adjusting the loan to match the market anyway. If they foreclose they will have the added expense thereof.  It doesn't take a rocket scientist to know it's cheaper to modify than to foreclose.  The alternative is government regulation,increased inventories of homes on the market and homowners in crisis. IMHO banks and private business will innovate and create the solutions to these problems.  Those who are forward thinking will be seen as the heroes. 

Oct 13, 2009 01:14 AM
Ron Wysocarski
Wyse Home Team Realty - Port Orange, FL
CEO, Pricing Specialist

John, I do not believe that was ever a realistic number, but it did get peoples attention.

Oct 13, 2009 01:19 AM
Ron Wysocarski
Wyse Home Team Realty - Port Orange, FL
CEO, Pricing Specialist

Chain Real Estate, it would be nice to see private industry lead us out of the mess. Government and efficiency are 2 words I rarely use in the same sentence.

Oct 13, 2009 01:21 AM
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

Most modifications seem to simply be forbearance agreements.  That doesn't help much.  I'm thinking that many of these "modifications" are being done simply to make the Obama administration happy that the bank did something.  Another year from now the bank will start up foreclosure anyway.  Unless the principal gets reduced most modifications will be useless.

Oct 13, 2009 09:34 AM