St Louis Mortgage: Recipients Exit Loan Modification Programs Fast   by Floyd J Tapia

in Finance / Mortgage    (submitted 2011-01-31)

The main loan modification program that was heralded as the best answer for this foreclosure fiasco seems to be now a dud according to St Louis loan experts.

You would think that the $75 billion loan modification plan would be enough to help thousands of homeowners but in reality many have dropped out of have been turned down according to St Louis mortgage brokers.

Only 340,000 homeowners have graduated to the permanent home loan modification program and are also making payments on time.

Still, those in Washington are saying that the housing market overall is better since Obama has been in office.

Comments by politicians say that these large number of homeowners who were rejected from government programs will in some way get help in other ways. That's pretty optimistic since their programs have failed Americans over and over again. Many are now seeking principal reduction program specialists to provide assistance.

St Louis principal reduction program specialists fear most of these homeowners will go through some type of foreclosure process before anything gets any better.

From the very beginning these programs were destined to fail. Most do not realize that Washington pushed for banks to sign up borrowers who needed help without demanding proof of income. Does this practice sound familiar?

So, when banks later required that this information be collected, thousands of these distressed homeowners who originally qualified were now disqualified or dropped out due to the administration's short-sightedness.

The problems and headaches escalated to the point that borrowers were accusing banks of losing their loan modification paperwork whereas banks were stating vehemently that borrowers were irresponsible and not sending in the paperwork needed or that they were not properly filled out.

There have been cases where consumers have made their house payments and yet have been unfairly kicked out of the program by irresponsible banks.

Such mistakes are inexcusable and put homeowners unnecessarily at risk of losing their home due to bank employee incompetence.

Since then, more changes have evolved. The U.S. Treasury now requires banks to collect two recent pay stubs at the start of the process.

Banks and servicers now have the right to ascertain the most recent tax returns from individuals who seek federal foreclosure prevention assistance.

This no doubt had an affect on the number of applicants. There were over 100,000 monthly applicants in the summer of 2009 compared to only 30,000 in May 2010.

The bottom line is that as more and more consumers drop out of these bailout programs, the larger this new wave of foreclosures will be. Not good news.

So, now the homeowner is faced with insurmountable debts and with the new projection that approximately 67 percent of borrowers with permanent modifications will now default once again within 12 months after modification, this is very bad news for our economy.

New data is showing that about 49 percent or more of consumers who dropped out of these programs in April 2010 received some type of alternative loan modification from their lender.

Another option that is now being used more often is the short sale in which banks agree to let borrowers sell their homes for less than they owe on their mortgage.

Most say that consumers will not take as a severe hit to the credit profile by going the short sale route. Plus, neighborhoods will also suffer less when it comes to home market values.

Banks in order to avoid high legal and court fees are now allowing homeowners the option to leave their home and turn in their keys. In return they will not have a foreclosure on their credit report.

Simply put, consumer advocates had high hopes for Obama's home loan modification program when it began but quickly grew disenchanted at the less than desirable numbers.

There has been little to no positive impact on this underwater housing market afforded by these huge federal bailouts according to St Louis loan audit experts.

It is sad that they didn't put the same amount of resources into helping families avoid foreclosure as they did helping banks.

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Get a St Louis home loan today. Also visit www.StLouisMortgageGroup.com for a FREE Loan Audit. Loan Modification Programs St Louis: Principal Reduction Program will help you and your business more than a loan mod. Call us at 314-334-0210 or 877-334-0210.