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Pressure is on lenders to modify mortgages
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The pressure is on lenders to modify mortgages but lenders are not giving easy handouts. There are varying degrees of distressed borrowers. Modification only makes sense for a lender if the borrower cannot make payments without it, but will be able to keep up with a lower mortgage payment.
While Washington policy makers are incentivizing lenders to perform mortgage modifications, not every homeowner will receive one. Lenders evaluate the long term potential of repayment on the new loan. Some homeowners will still fall behind on their payments even after receiving the temporary band aid because of income instability and may lose their homes one way or another. A modification that just delays the inevitable is more expensive for the lender.
Some homeowners who (may even currently be delinquent but) can catch up without a modification, have asset reserves, or could lower their lifestyle and sacrifice luxury items will find their lender is less than willing to modify the terms of their mortgage.
In a blog written by David G. Kittle, chairman of the Mortgage
We will keep an eye on Washington over the coming months to see how this all plays out.
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