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A Look at Foreclosure Assistance and Mortgage Modifications

John E. Miller


Although the number of foreclosures filings has declined across much of the country, there is still a large number of people facing foreclosure throughout the nation. Similarly, despite rising home prices, many families are still struggling with underwater mortgages.
Loan Modification Green Sign

Let’s take a look at what Fannie Mae and Freddie Mac are doing to assist homeowners seeking to avoid foreclosure while also taking a look at mortgage modification numbers for the second quarter of this year.

Foreclosure Assistance

A recent report shows that Fannie Mae and Freddie Mac has increased their number of actions to help struggling homeowners avoid foreclosures. Specifically, for the second quarter Fannie Mae and Freddie Mac performed 129,000 foreclosure prevention actions.

Since 2008, Fannie Mae and Freddie Mac have completed approximately 2.4 million actions in an effort to help struggling homeowners avoid foreclosure. In fact, approximately half of these actions have been significant loan modifications.

Overall, these foreclosure prevention actions have help close to 2 million families stay in their homes; however, others still question whether Fannie Mae and Freddie Mac (who were bailed out by taxpayer money) could of done more to prevent foreclosure for many who have already lost their homes.

Along with Fannie Mae and Freddie Mac, the five major banks that were key players in robo-signing and were part of the mortgage settlement agreement have also been taking actions to meet their end of the foreclosure settlement relief efforts, especially since there are incentives for these lenders to do more to assist struggling homeowners within the first year.

Mortgage Modifications

A huge part of foreclosure assistance on the lender part involves mortgage modifications. These modifications can help keep homeowners in their homes by reducing their monthly mortgage payments significantly. In fact, much of the mortgage settlement agreement involves encouraging lenders to offer mortgage modification for those with underwater mortgages and for families facing foreclosure.

A recent report shows that over the last year, private lenders have increased the number of mortgage modifications by 22%, while government lenders have decreased the number of mortgage modifications by 53%. Apparently loan modification standards for private lenders are more flexible, especially when it comes to the ratio of income to debt. As a result, private lenders have increased their mortgage modifications while government lenders are having a hard time trying to determine how to best cut their losses.

In the end, many states are finally seeing foreclosure assistance due to the mortgage settlement agreement and private lenders who are offering mortgage modifications with less strict qualification guidelines. Although many will receive assistance, many believe that these initiatives and the mortgage settlement agreement are simply not enough help to put a significant number of struggling homeowner back on their feet.

Article source: http://www.businessinsider.com/a-look-at-foreclosure-assistance-and-mortgage-modifications-2012-9

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