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Home loan modifications increase due to federal, private programs

April 6, 2010 - In an effort to help homeowners avoid foreclosure, increasingly more lenders are willing to work with borrowers to modify their home loans.

Through the government's Home Affordable Modification Program, nearly 1.3 million loans have been adjusted, and 168,000 of these were permanent, Housing Predictor reports. Furthermore, approximately 1.1 million other modifications have been completed through private programs.

Many of these private modifications were completed by small community banks, which have proven more likely to work with their borrowers. However, many big banks have begun to see the federal programs as an impetus for reform and have launched similar programs to help their customers.

Homeowners across the nation are in desperate need of these initiatives, as Housing Predictor expects that between 3 and 3.5 million homes will enter foreclosure over the next year. In the past two years, nearly 7 million homeowners have lost their homes to foreclosure.

Typically, modification programs require homeowners to make payments at the reconfigured rate for six months before it becomes permanent, according to the news source.

The latest figures indicate that the current rate for a 30-year fixed rate is 5.08 percent, BusinessWeek reports.

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