Mortgage Loan Modification New Rules Help Struggling Homeowners

In march 2009 the Obama administration introduced Mortgage Loan Modification in an effort to reduce the number of foreclosures in the US. Since then more than 250,000 homes have been saved from foreclosure under the Mortgage loan modification scheme.

Figures from the Treasury say that an increased number of people fell out of the trial period of the scheme in April this year. Under the scheme more commonly known as HAMP qualifying homeowners are put into a trial period to see if they can keep up with reduced payment’s. The people falling foul are those that either failed to provide the income evidence needed or in fact failed to maintain the reduced payment’s.

“As those decisions get made, it’s certainly expected that there would be some that fall out of HAMP,” said Phyllis Caldwell, chief of Treasury’s Homeownership Preservation Office.

Other figures indicate that 24.6% of trial modifications are now being made permanent which is up from a previous 19.8%.

Under a new rule introduced on June 1 new applicants for Mortgage Loan Modification or HAMP, are now required to submit evidence documentation up front where previously a verbal statement was accepted.

In a few weeks time, July 1 a new program aimed at the unemployed called forbearance will come to fruition. Eligible borrowers will be able to either have their payments suspended totally or have them reduced to less than 31% of the gross household income.