One of the main support legs in the Obama administration's Making Home Affordable program announced earlier this year has been loan modification, but the process has been dogged by controversy and undermined by scams. Yet, advocates still believe if the applicants can survive the cure, some financial healing can be achieved. Loan modification should not be a phrase subject to interpretation. It holds a hard and fast technical meaning: a permanent change in one or more of the terms of a borrower's loan, allowing the loan to be reinstated, and results in a payment the mortgagor can afford. The government's plan looks fairly simple; it wants loan servicers to bring monthly payments down to 31 percent of pre-tax monthly income. To do that, the government will subsidize the process, providing participation incentives for all parties, servicers, borrowers and even mortgage investors. Part of the complaints about the program is that it is too limited. The basic parameters are a...
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