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Foreclosure Rescues – A Better Mortgage Modification Plan?

The United States Treasury Department has been under fire for the past year as their $75 billion dollar mortgage modification plan has not significantly helped improve the foreclosure situation. In fact, only an estimated 66,500 people have received mortgage modifications that will help them keep their houses from the banks. Now, the federal government has announced new mortgage modification guidelines that they hope will improve the process and minimize confusion.

Up to this point, the largest problem with the foreclosure rescues has been paperwork. The amount of required paperwork, both my the government and by the individual banks, and the timeline in which the paperwork needed to be submitted, was leaving tens of thousands of families stuck in the middle of the process or in a trial period. The new guidelines require all paperwork to be submitted at once – including a summary of your foreclosure problem, your income and expenses, and permission to review your tax returns.

The Treasury Department hopes that the single dose of paperwork will help everyone deal with the flood of applications for mortgage modifications. They hope that applicants to the program will know the status of their foreclosure rescue within one month of filing.

Currently, almost a half-million homeowners are caught in limbo due to mortgage modification paperwork issues and other problems, while others are trapped in the trial period. The main concern of the government is to make sure that those who can make timely payments are given that chance.

The new foreclosure rescue rules take effect on June 1, 2010, though many banks will begin following the process before that time.

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