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The Problem With Government Loan Modification Programs

Here is the list of current home loan modification programs available to consumers who are trying to keep their home:
Home Affordable Modification Program SM (HAMPSM)
Principal Reduction Alternative SM (PRA)
Second Lien Modification Program (2MP)
FHA Home Affordable Modification Program (FHA-HAMP)
USDA’s Special Loan Servicing
Veteran’s Affairs Home Affordable Modification (VA-HAMP)
Home Affordable Foreclosure Alternatives Program (HAFA)
Second Lien Modification Program for Federal Housing Administration Loans (FHA-2LP)
Home Affordable Refinance Program (HARP)
FHA Refinance for Borrowers with Negative Equity (FHA Short Refinance)
Home Affordable Unemployment Program (UP)
Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (HHF)

All of these are available under the Making Home Affordable. It would seem that you have plenty of programs to choose from and you always hear updates about new programs being funded by the government, the latest being HAMP2 or HAMP 2.0. It is great that these programs have been created and they are spending money advertising these programs for our country’s consumers to use.


There is one major problem. When you look at where to submit these applications, they all need to be submitted through to your mortgage lender, the same people who send you multiple letters about your past due payments, lose your paperwork, put you on loan modification programs only to change the terms later on. Applications are sent to the same people that you sent you first loan modification application to, the same people who are trying to foreclose on your home!

Is it unrealistic to expect the people who are trying to foreclose on you and your family’s home to put everything on hold because they received another application from you under one of these programs? If the government wants to instate a program, but not have any way of enforcing the use of the program by having another channel besides the mortgage bank itself to process these applications, what good will this do? A bank can take your application and say it is in the loan mod processing department for years, only to build up your past due debt until it is too high for you to ever make up in a lump sum payment. If your mortgage company is no longer willing to negotiate with you, you don’t have any of these 12 programs as an option at all.

Bankruptcy may be the only solution to be able to take things into your own hands now. A Chapter 7 bankruptcy can postpone your foreclosure sale to give you more time in your home and plan for the future. A Chapter 13 bankruptcy can put all of your past due payments into a 5 year payment plan and keep you in your home for the long term if you qualify. Bankruptcy is handled by the court system and the government, not by your mortgage lender. Take control of your situation and see what you options are in bankruptcy.

Bankruptcy Law Professionals has locations in Riverside and Orange County to help you. We can be reached at 855 257-7671.

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