The Obama administration announced recently it will expand its $50 billion housing aid plan to help more homeowners avoid foreclosure.
The changes, aimed at homeowners who do not qualify for other aid, will make it easier for them to sell their homes for less than the cost of the mortgage or transfer ownership to the lender.
The president’s Making Homes Affordable program, launched in March, reimburses mortgage companies that modify borrowers’ loans to help homeowners make the payments and keep their homes. To qualify for a modified loan, borrowers must provide proof of income and a letter stating why they need help.
Companies have made more than 55,000 offers to modify borrowers’ loans, according to the Associated Press.
Some mortgage brokers complain the loan modification plan is too complicated.
“Our experience at the ground level has been, so far, frustrating,” Michael van Zalingen, director of homeownership at Neighborhood Housing Services of Chicago, a counseling group, told the AP. Some mortgage company employees are either steering borrowers away from the plan or are unaware of it, he said.
Not all homeowners will qualify for loan modification. But Faith Schwartz, executive director of Hope Now, a mortgage industry group formed in response to the foreclosure crisis, told the AP, “This is a very well-thought out plan. People have to be a little bit patient.”
The recent revisions are meant to help borrowers who owe significantly more on their mortgages than they can afford to pay and so don’t qualify for the loan revision program.
In the first quarter of 2009, foreclosure filings topped 800,000, according to RealtyTrac, an online marketer of foreclosed properties.
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