Congress is Working on Making Modifications More Widely Available

The Obama administration began the Home Affordable Modification Program at the beginning of 2009. Since then, many troubled homeowners have been able to get a modification on their mortgage so they can afford the payments rather than going through a foreclosure and being forced to move out of their home. It was a program designed to help people who have fallen on hard times. Unfortunately, many of these troubled homeowners did not qualify for the program because of their poor credit scores and payment history. The program has many restrictions which disqualifies a large portion of homeowners who need the help that it offers.

As a result of these restrictions, many homeowners have simply fallen deeper into trouble. They have missed more payments on their home and, as a result, their credit scores have dropped even further. This makes it even more difficult for them to get the financial help that they need.

Congress is trying to fix that situation. Representative Dennis Cardoza is introducing a bill that would loosen the restrictions on the modification plan to help troubled homeowners get the help they need with their mortgages. Under his proposal, about 30 million troubled homeowners who did not qualify for the assistance before will now qualify because their credit scores will not be an issue that determines their eligibility. The homeowner’s current income and loan-to-value ratio of their house will also not be a consideration when they apply for the financial assistance they need to help them avoid foreclosure.

Part of the proposal states that fixed rate mortgages will stay the same as or below the current rates. For homeowners who want to refinance their FHA secured home loans, they would have to apply for 30-year fixed rate mortgages under the plan. This will help make the Home Affordable Modification Program available to millions more homeowners who actually need the help rather than disqualifying them for having a poor credit history.

Do you think this is going to have a positive effect on the mortgage market? Or is this just another proposal that will get bogged down in red tape and become more of a burden than an actual help to anyone? Let us know your thoughts below.