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Loan modification may not bring much-needed relief

For many in Florida, economic struggles have hit home. Whether the result of a job loss, unexpected illness or other factors, many individuals and families are struggling to make ends meet each and every month. For those who are homeowners, trying to keep their home is a top priority. Loan modification may offer relief for some, but is not the panacea that many expect it to be.

One such program is known as the Home Affordable Modification Program, or Hamp. Implemented in 2009, this program granted permanent mortgage modifications to as many as 1.3 million homeowners. Hamp was burdened by a number of problems, however, and went through multiple revisions were made to the program. In the end, an estimated 350,000 individuals went on to default on their modified mortgages.

The modification agreements made in 2009 only covered a span of five years. Therefore, many homeowners who are in the program will experience interest rate increases this year. Those changes could raise their monthly mortgage payment by hundreds of dollars. With unemployment rates still high and economic recovery moving forward at a slow pace, some will find themselves at risk of foreclosure once again.

For Florida homeowners who have gone through loan modification, as well as those considering seeking this type of debt relief, it is essential to make decisions that are well-informed. In many cases, filing for personal bankruptcy may offer a better path forward. Each circumstance is unique, but with the right research and guidance it is possible to find a solution to virtually any financial scenario.

Source: The Guardian, "The government program that failed homeowners", David Dayen, March 30, 2014

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