The US government has responded to the dramatic problems in the housing segment of the economy by initiating a government loan modification plan that is directed toward homeowners who have seen the value of their homes decline to such low values that they now are trying to pay mortgages that have a greater value than the value of their home. This is very hard for many homeowners to handle and over the long term doesn't make good economic sense for the person paying the mortgage.
Hopefully the answer to this issue is through home loan modification where with the help of the government loan modification plan, the homeowner can make changes to their mortgages which allow them to pay them and as importantly, the mortgages now make economic sense to the homeowner. This is the right idea. But as with many good ideas, the there can be problems in its implementation. This is certainly the case with the government loan modification plan. Banks and assorted lenders have been reluctant to take up and support the plan. There have been quite a number of changes made to the government efforts to try and address those areas that the lenders balked at supporting. There have also been areas that haven't worked as well as hoped for the mortgage holders. In addition there have been issues in covering enough people so that the program has an impact on the national economy.
Loan modification is definitely an idea whose time has come. The challenge is to "get it right" so it gets the support of the private lending sector that has to implement it and get the coverage of homeowners broad enough so that a meaningful number of people can participate. It's a balancing at and one that as it moves forward, the Obama administration is learning and getting better at. Effective home loan modification is desperately needed and all the effort and work that is required to make it work is well justified.
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