Loan modification redefaults growing

troubled homeowner's foreclosure noticeLoan modifications for troubled borrowers under the Home Affordable Modification program have come under criticism from the inspector general for the Troubled Asset Relief Program.

“Already, 398,222 homeowners have not been able to keep up with their mortgage payments even though payments were lowered by HAMP,” the report states. “Overall 29 percent of homeowners in HAMP have already fallen out of the program. However, the bulk of homeowners in HAMP who started participating in the program in 2009 and 2010 are falling out of the program at ever more alarming rates.

“Approximately half of all homeowners who entered HAMP in 2009 have fallen out of the program. Homeowners who entered the program in 2010 have redefaulted at a rate of 40 percent.”

Troubled homeowners in Ventura, Los Angeles and Westchester, Calif., please be aware: Banks and servicers don’t provide an early warning system for those troubled borrowers who are in danger of redefault.

Redefaulting hurts you in the long run. The biggest ding on your credit report when you stop making your mortgage payments over time. Homeowner beware — bad credit negatively impacts you and threatens your family’s future.

homeowners who have redefaulted on loansAlthough the Federal Housing Finance Agency (FHFA) recently announced that it is extending HAMP through 2016, the SIGTARP report says an extension “is not enough on its own to bring about meaningful change, particularly as hundreds of thousands of homeowners who got into HAMP, fell prematurely out of the program.”

Servicers get incentives from the federal government for processing a loan modification application. Banks continue to make money while you “think” you are getting a loan modification. You make the payments you can’t afford, not knowing you won’t be getting that loan modification. Honestly, of those troubled homeowners only 1 in 6 of those whose application was accepted actually received a permanent loan modification — dating back to the inception of the program.

Troubled homeowners should consider the consequences of redefaulting on your loan after a loan modification.

Call me, Cindy Marty, at (310) 663-9427 for a free consultation to avoid foreclosure. Homeowners, redefaulting is a growing problem — but you are not alone.

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