Home Loan Modification Program May Be Helping Subprime Lenders

by Jewish Historical Society of the Upper Midwest

Home Loan Modification Program May Be Helping Subprime Lenders

Subprime lenders who fueled the U.S. housing crisis may be reaping benefits from the Obama administration’s Home Loan Modification program, according to a report from the Center for Public Integrity (CPI).

The -billion program, dubbed Making Home Affordable, grants taxpayer subsidies to lenders who successfully lower monthly payments for troubled borrowers. However, the study shows, 21 of the top 25 participating lenders were involved in subprime loans, which led to the housing collapse in the first place.

CPI executive director Bill Buzenberg says that much of the money is simply going back to the same companies that started the problem. According to the report, three of the biggest lenders – Countrywide, Wells Fargo, and JPMorgan Chase – are eligible for several billion dollars in aid under the program.

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The government has recently urged lenders to crank up their home loan modification assistance programs as the Making Home Affordable plan went off to a slow start. As of last month, less than 10% of eligible borrowers have been aided by the program, according to estimates by the Treasury Department.

The CPI report went on to show that mortgage lenders and servicers have been slow in following the government’s efforts to stem foreclosures, despite “intense pressure” from the White House and the Congress. This is why, the report said, the government has resorted to incentive payments to get them to participate.

Major lenders have slammed the report, saying it undermines their real efforts to help homeowners. Scott Talbott of the Financial Services Roundtable, a group consisting of the largest U.S. lenders, says that it oversimplified the roots of the housing crisis and ignored the complexities of the real estate market.

Talbott added that lenders are doing what they can to help troubled homeowners through the Making Home Affordable program, as well as other foreclosure prevention initiatives.

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Where are the low-income home mortgage lenders that actually make home loans to families with low incomes?

Question by Stephen C: Where are the low-income home mortgage lenders that actually make home loans to families with low incomes?
Where are these so-named low-income home mortgage lenders I hear so much hoop-la about? I’ve been searching for months and have yet to find one that actually makes these loans. Most won’t make a loan for less than 100k. Others won’t touch you if your monthly income is less than 2k a month. The knelt won’t touch you unless you have good credit. If your actually low income you can’t afford to buy anything on credit (even if you could find someone to extend you credit), thus your credit is considered poor because you don’t have any credit history. The catch 22.

Best answer:

Answer by katb
If you live in a rural area than look for a bank that does Rural Development loans. Up to 115% financing for low-moderate income. Otherwise look for a bank that does FHA loans.

Know better? Leave your own answer in the comments!

if you file bankruptcy, are mortgage lenders more or less likely to work with you for a modification?

Question by bnwng98: if you file bankruptcy, are mortgage lenders more or less likely to work with you for a modification?
in filing chapter 13 bankruptcy, are mortage lenders more or less likely to work with you to get a home modification. My home has dropped 90,000 in value and it’s really not worth paying on a 170,000 loan when other houses in my neighborhood are being sold for 80,000 and getting a lower interest rate.

Best answer:

Answer by jlf
Mortgage modification decisions are not made on the basis of your home’s current market overestimated. They are made based on your ability to pay the loan. You can’t get a principal reduction just because you want one.

What do you think? Answer below!