Up until now, banks have been the bad guy in the mortgage crisis. But it seems like America's most hated corporations are finally trying to redeem themselves.
Banks are working to offer better loan modification programs to troubled borrowers, according to a recent article in Newsweek. And the timing couldn't be better, with recent reports that half of homeowners in the government's Making Home Affordable program ended up throwing in the towel. Unfortunately, banks won't be able to help every one of the millions of homeowners at risk of foreclosure.
Currently, up to 5 million people face foreclosure - and another few million have already gone through the process. Banks are stepping in where Uncle Sam left off to help these homeowners. For instance, Bank of America has modified 665,000 mortgages since January 2008 - that's almost ten times the amount of mortgages deemed eligible for Making Home Affordable.
Unlike the government program, banks don't require quite the same amount of red tape - including getting bounced around from department to department, having staff lose paperwork and sometimes having to start from square one. And while Making Home Affordable can only help homeowners that meet certain requirements, bank programs can often be tailored to meet the needs of individuals.
Of course, bank programs are still far from perfect. Their biggest shortcoming? As opposed to Uncle Sam, lenders aren't trying to help homeowners - they are trying to help themselves. They're in the business of providing mortgages, not owning homes - and all those loan defaults are hurting their credit ratings. That means that they're only interested in helping a certain kind of customer - the kind in the situation to pay them back. In other words, they're looking for low debt-to-income ratios.
If too much debt is making it hard to pay the bills, your lender might give you the run-around when you try to modify. Fortunately, you have an alternative. For decades, Chapter 13 bankruptcy has been offering struggling homeowners a way to both protect their home from foreclosure and pay down debt affordably. Interested in learning more about bankruptcy? It's free when you sign up for a one-on-one debt analysis with an Atlanta bankruptcy attorney.
