Today, the Obama administration put pressure on lenders to complete more mortgage loan modfications for homeowners either through in house guidelines, or under the Making Home Affordable program.  Many lenders are hessitant to modify mortgages due to a variety of factors, however, the actual investor on the mortgage backed securities, or investors, are becoming less and less of a stopping block according to recent news.

Although servicers rarely admit this, typically on each loan modification request, a NPV, or Net Positive Value Test is performed to see whether it makes sense for the lender to modify the loan or simply foreclose.  Typically, when a homeowner is significantly upside down on their mortgage, a lender is more likely to grant a workout as the cost of foreclosing plus attorneys fees, maintenance costs for time spent on market, and realtor’s fees are significantly higher than the money lost due to modification taking into account the likelihood that the borrower may re-default on the new payments.

This is why it is very important to have an expert that can coach you or represent you in such a light to your lender that clearly demonstrates a maximum loss to the lender should they foreclose on your property, and helps you perform the balancing act of showing enough hardship to get the lender to understand that you truly will be forced to walk away from the property if nothing is done to aleviate your financial burder, along with showing that if a modification is granted, you are more than able to make the new payments.

An additional point to be taken into consideration is also the fact that while the Obama Administration is urging lenders to modify more mortgages, it is not considering to what degree these loans are modified.  On an average $300,000 house, the difference between an agressive loan modification and one that is not can mean thousands of dollars spent every single month on the mortgage.

Please keep this in mind as you read the following article from the Wall Street Journal:

The Obama administration is pressing mortgage-servicing companies to step up their efforts to modify troubled loans under its housing-rescue program, the latest sign of frustration with the pace at which mortgage companies are reworking troubled loans.

“We believe there is a general need for servicers to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share,” Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan said in a letter to 25 mortgage-servicing firms.

The letter was sent Thursday to the chief executives of companies that have signed contracts to participate in the government program, which provides financial incentives for mortgage companies and investors to reduce borrowers’ payments to affordable levels.

More than 270,000 borrowers have received modification offers under the program. But housing counselors complain many borrowers are waiting for help as mortgage-servicing companies get up to speed. The administration has said its program could help as many as four million homeowners.

The administration has “started to see a significant ramp-up” in modification activity, the letter said. But it added, “there appears to be substantial variation among servicers in performance and borrower experience.” It called on mortgage-servicing companies to beef up staffing and training, and to provide “an escalation path for borrowers dissatisfied with the service they have received.” Freddie Mac, which serves as compliance agent for the program, will be developing a “second look” process in which it will audit a sample of rejected modification applications, the letter said.

The letter also called on mortgage companies to suggest ways the administration can improve the program’s design.

Housing counselors say they have been disappointed by the lack of progress under the administration’s program. “We are not getting anywhere near the level of resolutions we expected,” said Bruce Dorpalen, national director of housing counseling for Acorn Housing Corp., which works with financially troubled borrowers. “The real issue is that generally the servicers are not up to speed.”

Often, housing counselors “must educate the staff of the servicers about their own program,” said Maeve Elise Brown, executive director of Housing and Economic Rights Advocates in Oakland, Calif., which counsels homeowners. “Homeowners on their own are not able to navigate the system.”

Source: Ruth Simon, Wall Street Journal

In the aftermath of the foreclosure bailout and lenders not stepping up and helping homeowners to modify mortgages unless it is truly convenient for them, many homeowners are left wondering, “Can I truly save my home?”  If you are paying too much for your mortgage currently, do not trust your financial future in the hands of a servicer that will place you on hold for hours on end and doesn’t have your best interest at heart.  Modification Zoom can guarantee a loan modification for you that will help you prevent and avoid foreclosure.