With the federal government pushing banks to perform loan modifications on behalf of their distressed borrowers, many banks have followed suite. With hefty incentives that are paid for by the American tax-payer lingering in front of their faces, banks are taking the bait and moving monumentally quicker than they did just a year ago. To the credit of new programs and the government's incentives, what once took 10-12 months can now take just a few weeks.
However, if you have tried performing a loan modification or know somebody who has, you know that submitting a loan modification request is no reason to pop the cork off the champagne. On the contrary, many people are finding that there are still a lot of holes in the system. One overwhelming problem for most borrowers is the trial period. Once a loan modification is made, banks will require the borrower to make the payments that the loan modification has outlined. Most borrowers are under the impression that if they make their payments during the trial period that the loan modification is official. Things couldn't be further from the truth. Many borrowers find themselves meeting all the requirements that the banks have outlined and than being turned down for the modification. This has left many borrowers confused and homeless.
Nonetheless, many analysts and economists are 'cautiously optimistic,' the new phrase coined during this recession. But housing numbers are looking better and those who have lost their homes are taking up inventory in rental properties across the country. The moral of the story is simple, if you're submitting a loan modification package to your lender, I would advise you to be 'cautiously optimistic.'
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