Banks are finally starting to see the light about the mortgage crisis. But is it too late?
Banks are starting to improve programs aimed at helping homeowners avoid foreclosure, according to Newsweek. Amid news that half the participants in President Obama's Making Home Affordable Program have dropped out because it wasn't working, banks' timing couldn't be better. The only problem is that, with up to 5 million people in danger of losing their homes - and millions more already foreclosed upon - the new effort might not be enough. Fortunately, there's an alternative.
Of the more than half a million modifications performed by Bank of America since 2008, only 11 percent were qualified for Making Home Affordable. That's because not many Americans fit into the government program's strict guidelines. For folks who qualify, making it through bureaucratic red tape has been a nightmare, with long waits, lost paperwork and poor communication - in some cases, the person helping the homeowner with their situation wasn't aware that another bank department had already foreclosed on their home.
Banks, on the other hand, have more flexibility to tailor modifications to the individual needs of troubled borrowers. With that said, keep in mind that banks aren't doing this in the best interest of the customer - they're doing it for themselves. They want to decrease defaults to boost their credit ratings - and they only need to perform enough modifications to make their statistics look better. When deciding whether to help a customer, lenders are looking at things like debt-to-income ratio and whether you can make payments in a trial period.
If you're at risk of losing your home to foreclosure and you're finding that a loan modification isn't fitting your needs, consider an alternative that's been around through both booms and busts: bankruptcy. Filing for bankruptcy can stop foreclosure and protect your house. Want to learn more? It's free when you try a complimentary personal debt analysis with one of our Chicago bankruptcy attorneys.
