Many homeowners are struggling to pay their mortgages while they watch neighbors and other homeowners across the nation mail in keys and walk away from their homes in foreclosure. While keeping current on a mortgage is the morally right thing to do, some upside-down homeowners wondering if they are making the right financial decision by staying in their homes. Would it be better to walk away from a home now when the homeowner believes that the amount owed on the mortgage will never equal the value of the home? And is it fair to keep making payments on a mortgage when others are seeking help to modify their mortgage payments, interest rates, and principal balances?
According to many mortgage companies and banks, the only way a homeowner can attempt to qualify for a loan modification under Obama's Administration's Home Affordable Mortgage Program (HAMP), is to be behind on their monthly mortgage payments. This fact is tempting many distressed homeowners to consider what might have been unthinkable a decade ago: stopping payment on their mortgages and risking bank foreclosure.
Should Underwater Americans Deliberately Fall Behind?
Struggling homeowners who continue to make mortgage payments do not qualify for loan modifications. So some homeowners have purposely fallen behind to work out a better deal with their mortgage loan services. However, homeowners that do fall behind, purposely or not, are gambling on losing their homes to foreclosure if the loan modification is not successful. Just because a home lending institution has started a homeowner on a trial modification, does not necessarily mean he or she will qualify for a permanent one. If a bank decides not to grant a permanent loan modification, it usually asks the homeowner to become current under the old mortgage terms - frequently to the tune of several tens of thousands of dollars.
Foreclosure Relief Program Deemed Ineffective
Recently, critics have castigated the Obama Administration's foreclosure relief program as "ineffective." HAMP has not achieved the targets set out for it - it has not even come close. So far, loan modifications authorized by banks through HAMP have saved less than one-third of the homeowners targeted for the program.
For homeowners with temporary loan modifications or for those facing home foreclosure, an experienced bankruptcy attorney could help explain options you may still have to save your home.
