The Loan Modification Debacle

The Loan Modification Debacle

Over the last several months, we have been hearing more and more complaints about banks and the troubles caused by the HAMP legislation recently enacted by the Obama administration (Home Affordable Mortgage Program).  Stephanie Armour of USA Today discusses a variety of lawsuits that have been filed across the country by consumers in this article in relation to HAMP.  We represent several borrowers who have attempted to apply for the HAMP program and have had nothing but trouble dealing with the banks and their representatives.  This article is a good illustration of potential problems that could occur as a result of entering the program including the very high likelihood that when the trial period is over that most borrowers will be denied of their requested modification.  While some borrowers have no choice but to attempt to modify their mortgages under HAMP, others do so because they think it is an easy mechanism to reduce their interest rate.  For those of you that fall into the latter category, think again.  Any borrower that voluntarily enters into the HAMP program will most likely automatically breach their loan agreement and go into default with their lender. This will undoutedly have a negative impact on your credit.  Most of the time, there are better options available for borrowers who want to reduce their interest rate rather than entering into the HAMP program (or any other modification program for that matter).  The article referenced above discusses many of the shortfalls of the program and the negative impact that it could potentially have on the borrower.

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