Looking to the future many Florida homeowners may find themselves getting more help from lenders in terms of being able to secure a mortgage modification to avoid foreclosure.
On Thursday the U.S. Treasury Department announced it would be suspending all incentives to three major lenders from the federal Making Home Affordable modification program with the hope that the banks will correct internal problems in order to better help and serve homeowners who are attempting to obtain a loan modification.
The announcement states that Wells Fargo bank, Bank of America and J.P. Morgan Chase will all have their incentives withheld as the three lenders are in need of “substantial improvement” in the way that their loan modification process works.
In general, the purpose of the modification program is to keep those in danger of foreclosure in their homes by increasing the life of a loan, lowering interest rates or reducing the principal amounts owed on a loan.
However, since the Making Home Affordable program was first started in 2009 it has been criticized due to long delays between the trial program and permanent plan, and also high default rates. If the banks make necessary changes, this could mean that more homeowners will be helped more quickly before they lose their homes.
As of now there are close to 72,000 Florida homeowners in the permanent plan, and another 17,711 are in trial programs.
In addition to the three banks, Ocwen Loan Servicing was also listed as needing substantial improvements, but the Treasury Department did note that much of the problems stems from an acquisition in May of last year. Due to the acquisition negatively affecting their foreclosure prevention program, the lender will continue to receive incentives.
Source: The Palm Beach Post, “Big banks penalized for lack of homeowner help,” Kimberly Miller, 9 June 2011