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Home prices fell in November for the first time in seven months, according to a industry report released Tuesday.

Existing home sales fell in December, the month after a federal tax credit was slated to expire, according to a real estate industry report issued Monday.

Hundreds of thousands of troubled homeowners who are making lower mortgage payments on a trial basis are at risk of being kicked out of President Obama's foreclosure-prevention program.

Struggling to pay your FHA mortgage? Now you no longer have to be late with your payments to get help.

Last Friday Treasury revealed the latest data on HAMP, the Administration’s major foreclosure prevention program. The data has been sold as evidence of the significant progress made from pressuring mortgage servicers. Are loan modifications finally becoming the solution for the mortgage crisis as the Government has always claimed?

Let’s have a look at the figures.

Around 900,000 homeowners have entered the program with a trial loan modification.  66,465 homeowners have received permanent modifications as of December 31^st. That’s where the good news lies, November’s figures for permanent loan modifications were half that, at 31,382. This progress is being reported by Treasury as a “significant acceleration of the rate at which borrowers are being approved”. Hard to argue with that when the numbers doubled in a month, but is it enough?

Let’s have a closer look at the figures and the program as a whole.

The program is designed to allow homeowners to enter a three month trial loan modification, during which they are supposed to provide lenders with all the documentation required for a permanent modification. However trials are stretching for much longer. Servicers blame homeowners being slow at handing in paperwork; homeowners blame servicer of losing paperwork and making mistakes. Treasury’s response to this mess has been to allow for longer trial periods, up to 5 months. However mortgage servicers have kept homeowners in what is being called “trial purgatory” for up to nine months.

This seems to be one of the big issues the HAMP program faces, a complete gridlock of loan modification trials. Have a look at these figures:

In October Treasury reported that 487,081 trial modifications had been started. Three months later not even 24% of those trial modifications had been resolved one way or the other. Let’s put this another way 76% of the current trial loan modifications are in limbo. Treasury has pointed out that 46,000 homeowners have been approved for a permanent loan modification but are yet to sign the paperwork that will make it final. Even if this were true it would still mean that 66% are still waiting for a verdict on their loan modification.

Consumers are blaming big banks for creating this loan modification limbo and the figures seem to support that claim. The big four banks, Bank of America, JPMorgan Chase, CitiMortgage and Wells Fargo represent more than 60% of the 3.4 million mortgages eligible for the HAMP program. The best of the bunch Wells Fargo has only completed 13% of its eligible loan modifications. The rest are doing much worse. Bank of America the largest mortgage provider by far is performing the worst, converting only 3% of their 1 million eligible mortgages into permanent modifications.

No matter how Band of America tries to window decorate these figures advertising they have surpassed the 200,000 trial modifications barrier, this is all rather pathetic. We are not even saying they should convert more trials into permanent loan modifications but at least put homeowners out of their misery and tell them what the outcome is, one way or another.

Related posts:

1. Loan Modifications Are Going To Be Simpler, What Do You Need Now?
2. Loan Modification Horror Stories, What Are The Lessons?
3. Wachovia Loan Modifications Help Only 3% and May Damage Your Credit Rating

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1. Loan Modifications Are Going To Be Simpler, What Do You Need Now?
2. Loan Modification Horror Stories, What Are The Lessons?
3. Wachovia Loan Modifications Help Only 3% and May Damage Your Credit Rating

Loan Modifications and Home Refinancing are been talked about so much they are becoming the most used financial buzzwords by homeowners nationwide. This doesn’t mean people understand the differences or the financial consequences of either of them.

This article seeks to look into the pros and cons of Loan Modification and Mortgage Refinancing and to provide clear guidance to when it is best to modify your existing mortgage or to refinance it altogether.

Let’s start with some basic definitions for Loan Modification and Mortgage Refinancing so we are on the same page on what we mean by these terms.

Loan Modifications.

Loan modifications are used as a tool to lower the monthly payments of troubled homeowners. The whole purpose is to help people that are struggling to pay their mortgage by either lowering their interest rates, extending the term of the loan or in some cases reduce the principal balance of the loan.

You do not need to have equity on your home to apply for a loan modification, the government is actually subsidizing loan modifications through the HAMP program so that more homeowners can qualify.

Mortgage Refinancing.

Mortgage refinancing is a way for borrowers to get a better deal on their mortgage. You effectively pay off the current mortgage and negotiate a new mortgage with better conditions. This can mean lower monthly payments, lower interest rates, a shorter loan term, which reduces the cost of the loan, or a safer interest rate type (fixed, variable, ARM)

You can refinance with your existing lender or with a new lender. You do not need to be in financial difficulties to apply for a mortgage refinance. You will generally need to have some equity on your home for a lender to agree to refinance your home and be able to afford the new monthly payments which will not be necessarily be lower.

Which is the best for you?

This is a question only you can answer, because it completely depends on your personal circumstances. Here is how you work out which is the best option for you:

1)      Do you have equity on your home?

Or put another way is the current value of your home lower or higher than the pending balance of your mortgage.

If you have negative equity, or owe more than the house is worth, then you are really going to struggle to refinance your home unless you are willing to pay ridiculously high interest rates, extend the term of your loan or/and increase the cost of your monthly payments. You don’t have to be a finance guru to know that is not what you want. If you are in negative equity nine times out of ten you are better of getting a loan modification, which in its current form was pretty much designed to help out borrowers in your situation.

However if you are fortunate enough to have a decent equity on your home you are very likely to find a lender that is willing to refinance your mortgage with a better deal; especially if you bought your mortgage a few years ago when interest rates were higher.

2)      Are you worried about your credit score?

Loan modifications affect your credit score whatever your lender has told you. Refinancing your mortgage does not affect your credit score negatively, it might even improve it. It is true the government has created a new “label” for people that apply for loan modifications which in theory will not affect your credit score but the truth is that it will; if not right now it will in the near future. Banks and lenders are wary, quite understandably, of customers that ask for breaks on a loan agreement, and that is what you are doing when you ask for a loan modification.

Nevertheless if you are struggling to make it to the end of the month and have little or no equity your goal is to save your home and your credit rating is probably the least of your worries. Get a loan modification.

3)      Does it reduce your interest rates?

This is the big question. Whichever road you take, Loan Modification or Mortgage Refinance you need to make sure your interest rates have dropped or you principal loan balance has been reduced, the latter is very unlikely I’m afraid. If your interest rates are not lower any savings on your monthly payments are going to cost you in the long run, look for a better alternative.

To illustrate, refinancing your mortgage could cost you anything from 0% to 3% of the balance of your mortgage but if you negotiate a lower interest rate, preferably a lower fixed interest rate, then you could recoup your costs in three to six months. If your interest rates have not dropped you are just giving your money away to the bank.

Related posts:

1. Loan Modification Alternative by CitiGroup: Refinancing 30 Year Fixed Rate Mortgages
2. Loan Modification And Loan Refinancing What Is The Difference
3. What Is A Home Loan Modification

Related posts:

1. Loan Modification Alternative by CitiGroup: Refinancing 30 Year Fixed Rate Mortgages
2. Loan Modification And Loan Refinancing What Is The Difference
3. What Is A Home Loan Modification

Cut loan principal for borrowers whose homes are worth much less than their mortgages. Attack the problem of option adjustable rate mortgages. Cut down on red tape.

It's going to be harder to get a government-backed mortgage from now on.

That is what John Taylor, chief executive of the National Community Reinvestment Coalition feels anyway. Mr Taylor’s organization represents local organizations that are working towards affordable housing and community development. John Talyor like most Americans, including the millions facing foreclosure, and the 700,000+ that are on a loan modification trial and have not been granted a permanent loan modification, is not happy with the performance of the government’s loan modification program HAMP.

Of course he has another idea, a plan B as he calls it. He wants the U.S Treasury to buy out troubled mortgages for a discount value and then soften the payment terms for borrowers by even reducing the principal balance of the mortgage to something closer to the current value of the home. After the mortgages are modified into a more sustainable form the government could then sell them to investors.

The good news is that according to Mr. Taylor this could be done with a few hundred million dollars and should be even profitable to the government. This is a far cry from the hundreds of millions that are being thrown at the current loan modification program with very unsatisfactory results.

Interestingly, some private firms, like PennyMac Mortgage Investment Trust, are already doing this, and you know they aren’t doing for the love of neighbor. Taylor says that the Government should get into this business especially since it is because the government is propping the whole mortgage market that companies like PennyMac can even operate.

The downside of this proposal is that Government will probably not be that good at assessing the value of homes and modifying the home values. Another issue is the awkwardness when the government has to foreclose and evict homeowners that can’t pay their mortgage payments even after the loan modification.

Taylor suggests that the Government could cope with these challenges by terminating bad mortgages in relatively more gracious ways by allowing for short sales, where the lender agrees to sell the home for less than the loan balance.

Obviously Taylor’s plan B has its issues and there are no guarantees it will work. However, the Obama Administration needs to look for alternatives to the current HAMP program.

December’s loan modification figures were somewhat encouraging, permanent loan modifications doubling up to 66,465, but still inadequate figures for the wave of foreclosures the mortgage market is facing. The Administration needs to look at a Plan B if it is to provide significant help to the troubled borrowers that need it.

Related posts:

1. Loan Modifications Latest Figures, Limbo, Trial Purgatory And Other Horror Stories
2. Loan Modifications Cannot Stop the Rise in Foreclosures
3. Loan Modifications Short Guide To Success Part 2 – The Guide

Related posts:

1. Loan Modifications Latest Figures, Limbo, Trial Purgatory And Other Horror Stories
2. Loan Modifications Cannot Stop the Rise in Foreclosures
3. Loan Modifications Short Guide To Success Part 2 – The Guide

Home construction fell in December, government data showed Wednesday, while the number of building permits issued in the month rose.