Lowell Deeds

The latest on real estate recordings and new technology from the Middlesex North Registry of Deeds in Lowell

May 14, 2009

Status of Federal Mortgage Modification Program

by @ 11:22 am. Filed under Real Estate

The New York Times reports that the two month old Federal home loan modification program, designed to help homeowners avoid foreclosure, is only just getting off the ground. Two big stumbling blocks – how to deal with the many second mortgages out there and providing protection investor lawsuits against mortgage servicers who modify loans – have taken this much time to resolve. However, another factor that many deem critical – a provision that would allow Bankruptcy Court judges to reduce the amount of principal owed on mortgages – was recently defeated in the Senate and is no longer an option. The inability to reduce principal owed is a major obstacle to any recovery. More than 20% of the owners of single family homes in America owe more on their mortgages than their houses are worth. Even if their monthly payments are reduced through reduced interest rates or extending the term of the loan, any kind of disruption of income flowing into such a household sentences that family to foreclosure since they would be able to sell or refinance given their negative equity in the home.

Still, it is anticipated that up to 4 million American homeowners will be able to take advantage of this program. When it finally kicks into gear, we can expect a wave of refinancing to hit the registry and a resulting spike in our level of recording activity, a development that would be welcomed by everyone.

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