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Tuesday January 16th 2018

Benefits of the Government Loan Modification Program

2008 was the year the economic recession really reared its head as the housing market starting taking a dive. In response, the Bush Administration wrote up a government loan modification program to attempt to counter the decline. The program was a bust, leaving a bad taste in mouth of home-owning America.

President Obama’s first move in office was the Home Affordable program, which included a more beefed up government loan modification program for Americans to take advantage of. Instead of simply changing some of the requirements, the program — enacted in March 2009 — overhauled the default requirements and has offered a total of $75 billion dollars to lenders to encourage them to open their arms to homeowners who need modifications on their mortgage loans.

What this all boils down to: The new government loan modification program has made getting a modification easier than ever.

Possibly the biggest change besides the $75 billion dollars worth of incentives is the fact that the program works for the homeowner’s side in a very significant way.

Under the previous program, the value of the property the homeowner was trying to get a modification on would not go lower than 92 percent. Not many homeowners can say their property has retained a value close to the initial purchase value, and this impossible requirement was the reason the program only assisted a few hundred families.

The new government loan modification program is exclusive to those whose property values have fallen past that 92 percent mark. It’s unfortunate that so many homes have fallen to 60 or even 40 percent of the initial purchase value, but a loan modification is meant to bandage over some of that damage.

However; it must be said that modification does little for homeowners who have fallen property values besides to lower their payments — their mortgage is still based on the purchase value. Loan modification essentially affects the interest rate, and not the value.

Another great feature of the current program is that homeowners who have applied for modification before but were disqualified are eligible to apply again, no matter the reason for disqualification before. This is a fantastic feature for those who applied in the past but were ineligible because they were not in financial hardship at the time but are now. As unemployment is at an all-time high this can be a great relief to thousands — maybe millions — of people.

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