Many people are happy that the government is finally stepping in and trying to put a stop to the foreclosure problem that has nearly crippled the real estate market in this country. While it is great to see some help, it comes in a form that raises a lot of questions. The program will allow people who are struggling to make their monthly mortgage payments to modify their loan with the bank and owe less each month.
Now this deal is only available to people who are paying on time but can prove they are struggling to do so. It may seem weird that this will only help a specific type of person who is struggling. You also need to watch out for a hit to your credit score when you apply for the help. People have reported over a 100 point drop of their credit score when they just apply for help that gets worse when they are approved. Many experts say a foreclosure would hurt your score well more than 100 points.
If you think this does not make sense, it actually is a great idea. See if you are struggling to make the mortgage payments on time each month but are doing so, the lender will more than likely not help you modify. They feel that you are not going to be a risk of foreclosure and there is no reason to help you. A loan modification would cost the bank thousands of dollars, and that is not something they are interested in doing unless you are at risk of not paying the entire loan. That’s why the government program is a help, because it directly impacts the people who are unable to get a loan modification on their own, rather than the ones who can.
By Maria Carey