If you're thinking of applying for a home modification loan, DON'T!

When this topic was first announced, billions of homeowners thought they would get relief from the heavy burdens of high mortgages. The intention behind the modifications was to save family homes across the country. They thought they're mortgages would be lowered and they would have a chance to keep their home.

Home Loan

This is not how it turned out. While the intentions were for the homeowners, and the politician bickered and fought for the revisions they wanted, the mortgage companies schemed and the results you ask? Total chaos.

The process of applying for a home modification loan is fairly simply. The mortgage company sends you an information packet including a hardship form to fill out as to why you need to lower your payment. In the packet they request specific information regarding your finances. That's understandable; they need the information to make a determination. Based on the information, they give you a three-month trial modification mortgage amount that must be paid on time every month. The difference can be a few hundred dollars up to thousands, depending on your financial situation.

They continue to request the same information throughout the process; even if you have already sent it, you will be required to send it again. When you speak to them, they will request such minute information that you scramble to get it together. When you finally think that you have sent them all they will need, they need more.

What they don't tell you is that while you are on the modification program, the difference between the modification amount and your original amount accrues with interest. The mortgage company reports to the credit agencies that you are behind on your payments and your credit score goes down.

Even if your original loan did not have an escrow for taxes and insurance, a modification loan requires that you have one. A certain amount of the mortgage payment is set aside but the kicker is that they will not release it until the following year. That means that you are responsible for paying the taxes and insurance out of your own pocket, and if there is a balance owed to the mortgage company they apply whatever is in escrow to that balance.

The mortgage company will present hoops for you to jump through by way of requesting information, and if you miss even one, your loan will be denied. You have to be diligent in calling them at least once a week to find out what the status of your modification is, if you don't you will be denied and owe them huge sums of money. It WILL put you into foreclosure.

The Feb 18, 2010 edition of USA TODAY states that over a million people in the United States have applied for modification loans, and of the million people, only 12% have been converted into a permanent modification.

Economists estimate that within the next three years, over six million homes will be foreclosed upon. This is unacceptable.

Seventy Five billion dollars was set aside to save family homes in the United States and because of the bickering and fighting within the government, mortgage companies have instituted deceptive practices and nobody noticed. They pocketed the funds and families are being left homeless because the political parties wanted to 'one up' each other to get their own way like children fighting on a playground.

It is time to stop the bickering and fighting and take a very close look at what these mortgage companies are doing and find a way to solve the problem before six million people are living on the streets of America.