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by sitecore\kmcgrigg on June 01, 2010

There has been a lot of attention placed on home modification loans as a way to help prevent home foreclosures. A home modification loan is an agreement that actually changes the term of your existing loan. The Making Home Affordable program uses government subsidies and incentives to reduce principals and lower interest rates on conforming loans.

While loan modification is the right solution for some struggling homeowners, it is not the solution for every struggling homeowner.  Following are basic criteria to qualify for the Making Home Affordable loan modification program:

  • The property is owner-occupied
  • The unpaid principal balance that is equal to or less than a certain amount (based on number of units up to 4)
  • The loan originated on or before January 1, 2009
  • The mortgage payment greater than 31% of gross income
  • There is financial hardship that can be documented

If you are having trouble making your mortgage payments and are considering loan modification, there are some things you should know.

  1. You don’t have to go it alone. A HUD-certified housing counselor can help you assess the situation, create a plan of action, and outline next steps.
  2. It pays to be proactive. The most important thing to do is to take action. Seeking help sooner rather than later can increase the number of options you have available.
  3. There may be other options. Loan modification is only one of the many possible solutions to foreclosure. 
  4. Be patient, but persistent.  It takes time (and paperwork) to make changes.  Be sure to keep copies of all related documents for your files and be aware of any deadlines.
  5. You must beware of scams. Never agree to transfer your deed and do not make payments to anyone but your lender without their approval. There should not be a fee associated with housing counseling.

Finally, don't assume that there isn't help for your situation; there are new programs being launched all the time. For example, there is a new program designed to help people who unemployed. Part of a trained housing counselor’s job is to have the most up-to-date information available so that he or she can help identify your options.

For more information or to schedule an appointment with a HUD-certified housing counselor, visit our section of the website dedicated to providing foreclosure help. You can prepare for your appointment by checking to see if you are eligible for the Making Home Affordable program. To do this, you can use the tools found at

Posted in:  Mortgages


Darlene says:
June 10, 2010

A cautionary note - I have been in the process of getting a modification for some time now. One day I received a phone call from a woman who claimed to be with the "Underwriting" department. She said they still needed documents and she wanted me to fax them to her. It sounded odd and I do *not* believe she was with the bank or the "Underwriting" department. I think some of my personal data had been compromised and it was a scam attempt. I tried to speak to the bank about it, but they are so overwhelmed by all of this work that we could not really get anyone who knew what to do with the information I was giving them. So be aware. Finally, I recommend that anyone who wishes to do this not only document everything, but if you get into the home stretch, you will find it useful to call the HOPE hotline before making calls to your bank. It really helps to have someone else on the line with you!

Doris says:
June 10, 2010

This article was very useful. I've been in the modification process with a major bank for almost a year now. I've been getting quite discouraged because the process is taking so long. This articles helped me see that this is just the nature of the beast. Thank you!

Kim at MMI says:
June 13, 2010

Darlene- Thank you. I agree that people need to be very careful about protecting their financial information.

Sue says:
June 11, 2010

This program is nothing more than another government waste of money. We make less than $35,000/yr income. We applied...twice and got denied twice. I was told we are too poor to pay a mortgage, yet, we have been late once in 12 years on our mortgage payments. This program is for the 30% who are already deliquent. I was told we would be eligible IF we just didn't pay our mortgage for 2 months straight. It DOES NOT help those of us who struggle to pay our mortgage first above all other bills. This is another gov't program built for people who CHOOSE not to be responsible for their own finances, overspent, then cried to the government to bail them out. Since we were denied, the mortgage servicer has thrown our name into a "Short Sale Pool" and is badgering us to sell, even though we are current on our payments. My advise? Don't do it unless you truly don't want your home any longer, for they will try to take it.

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