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 October 12, 2009

Treasury Goal for Loan Modifications Hits Target
Treasury secretary Timothy Geithner recently announced that five hundred thousand trial loan modifications have now bee implemented as part of the Making Home Affordable Program. The number of mortgage workouts has been increasing at a faster pace than that of home owners who are nearing foreclosure on their homes.
A key factor to the success of the program is that before a loan can be considered reworked, the troubled home owners are required to submit tax returns along with other documentation. Additionally, they must also make timely payments on the reworked loan for three months.

A new consideration is how the current administration will handle holders of loans who are currently unemployed or underemployed and who wish to apply for a reworked loan. One proposal being considered is to have monthly payments lowered to less than 31% of income while the borrower looks for new employment.