Coalition: More homeowners avoiding foreclosure

11.26.08
By Timothy Jones

Even amid the relentless bad news in the housing market, there is good news to be seen as well.

Recent figures may reveal that foreclosure filings are rising, but an industry coalition also claims that it is helping more at-risk homeowners avoid foreclosure and stay in their homes.

Hope Now says that it has assisted around 225,000 borrowers in October, up from 212,000 the month before.

In particular, the alliance - which is made up of investors, counselors and mortgage servicers - says that home loan modifications have been gaining in popularity over the past three months.

A mortgage modification is an agreement between you and your lender to change the terms of the loan so that payments are more affordable. It may involve lowing interest rates, extending the length of the home loan or writing off some of the total amount owed.

Although it involves some initial loss for them, lenders are usually eager to modify the loans of at-risk borrowers so that they can recoup at least some of their money.

In fact, in the past few months some major banks have introduced mortgage modification programs for their customers, while the government has also introduced measures aimed at Fannie Mae and Freddie Mac home loans.

So, the bottom line is that many people who may be at risk of losing their homes can still avoid foreclosure by taking advantage of one of these existing programs - or by contacting their lender directly to see if they can arrange a modification on their own.

"The U.S. economy is still troubled and that means that changing the terms of a loan is an increasingly appropriate way to keep more homeowners in their homes," commented Hope Now's Faith Schwartz.

Both lenders and borrowers can benefit from these arrangements.

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It is possible to avoid foreclosure