Are Loan Modifications A Good Idea for Distressed Homeowners in Austin, Texas?

loan-modification-Merry-go-round

The Loan Modification Merry Go Round May Leave You Nauseous…and Homeless

Regardless of the financial situation, many people in Austin, Texas, have faced difficult decisions regarding their housing situation since the Great Recession of 2008.

Some folks saw their house payments increase due to their type of mortgage.  Others saw the value of their house decrease.  Many others suffered from an economic hardship that made paying their mortgages difficult.

Due to the rare economic times, distressed home owners were seeking ways to stay in their houses and avoid foreclosure.

One of the more popular theoretical alternatives to foreclosures has been a loan modification.

What is a Loan Modification?

A loan modification is when a borrower facing great financial hardship who is having difficulty making their mortgage payments works with their lender to change the terms of their mortgage loan.

The workout plan could result in temporary or permanent changes to the mortgage rate, term and monthly payment of the loan. The plan’s goal is to help the borrower reduce their monthly mortgage payments to 31% of their gross income.

On paper, a loan modification sounds like a great way to assist distressed homeowners.  But does it really work?

The Truth About Loan Modification

Many distressed homeowners become enamored with the idea of a loan modification.  The truth is not many loans ever get modified. What typically happens is what I call and describe in the video above as the ‘Loan Mod Merri Go Round’.

During the process, they’ll tell you everything looks good for the loan mod, and they’ll tell you to stop making payments…

Then they’ll tell you that you haven’t been approved…

And, oh by the way, your house is going to auction next month!

Can you imagine what kind of shock this is to trusting homeowners?

Loan Modification Statistics

Loan modifications were set aside to assist distressed homeowners.  As banks received close to a Trillion dollars, about $50 billion was set aside to help the people.

Only a fraction of that money was ever spent.

At the time, these programs were designed to help a projected 11 million people prevent foreclosure.  However, only about 2.2 million have been helped, and according to CBS News, 60% of those helped have landed back into default again.

The fact is that the loan modification process is flawed and most people end up in worse predicaments than when they entered the process.

If you’ve tried to get a loan modification and are now facing foreclosure, Hippie Hollow Homes can help.  We do not perform loan modifications due to the severely low success rates, but we can help you sell your house fast by providing you with multiple alternatives to foreclosures.  Since 2004, we’ve participated in more than 1,200 real estate transactions and there’s very little that we haven’t experienced in real estate.

 

 

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2 Responses to “Are Loan Modifications A Good Idea for Distressed Homeowners in Austin, Texas?”

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  1. Anonymous says:

    We are a group of volunteers and opening a new scheme in our community.

    Your site provided us with valuable information to work on.
    You have done an impressive job and our whole community will be grateful to you.

  2. Jason says:

    Hmmm… true, loan modification didn’t take off as it should have, and yet the government part of the program seemed to work really well. The problem is that the word didn’t get out to enough people and the banks that did get people took their sweet time in reviewing the requests. I wouldn’t want to say it was a failed program because it helped a lot of people, but it could have been better.

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