It seems that loan modification is turning out to be a popular method of curtailing foreclosure home listing in Saint Louis, Missouri.
Recent market data showed that so far, about 5,000 residential homes have been foreclosed by mortgage lenders and banks in 2009. However, a significant number of borrowers were able to save their properties by convincing their lenders to reduce their monthly mortgage payments into affordable rates.
Industry experts said that loan modification is becoming popular and lenient in the Saint Louis region. But they cautioned that the process still continues to frustrate many borrowers, with a great number of them being rejected and ending in foreclosure.
Most homeowners would say that their problems started when they lost their jobs. However, given no choice, many of these homeowners would take another job that pays $1,500 a month, a considerable reduction from their previous salaries. Some homeowners would find their properties are worth less than their total mortgage and so would walk away from their properties and leave it for banks to place them on foreclosure home listing.
A typical loan modification process involves reducing the monthly payment to affordable rates. In Saint Louis, loan modifications are becoming common due to the Home Affordable Modification Program (HAMP) of the Obama Administration.
The program provides counseling to distressed homeowners as well as financial incentives to mortgage lenders. So far, about 500,000 were in the trial modification process. Normally, homeowners would have their payments reduced during the trial period, which is three months. The banks would then agree to lower monthly mortgage payments and interest rates for at least 5 years.
In some cases, borrowers would be required to give three regular monthly payments before the rates could be lowered. Some interest rates are reduced by about 2 percent.
Since June to September, the number of people who participated in the loan modification program has reached 100,000 every month. However, in September, homeowners who availed of the program accounted for 16 percent of the total number of delinquent mortgages.
Industry experts said that there are indications that loan modifications has greatly help the city of Saint Louis trim down the number of properties on foreclosure home listing.
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