The most important thing is to take action.

Are loan modifications helping home owners? Results are mixed.

A report by a Congressional Oversight Panel says that HAMP (Home Affordable Modification Program) was too focused on subprime loans and may not be able to accomodate the increasing number of mortgage defaults resulting from unemployment or pay-option ARM loans. In other words, the foreclosure crisis has moved well into the prime loan segment of the population.

With the program dealing with the housing crisis as it existed six months ago instead of now, Treasury needs to find a way to provide loss mitigation to people who are unemployed or whose option ARMs are re-setting. Read the report in its entirety here.

Here's what I found interesting: Nearly two-thirds of borrowers who'd received modifications lowering their payments 10% to 20% were current on their mortgages nine months later. But two-thirds who received modifications that did not lower their payments were defaulting none months later.

I continue to believe that until the disincentive of owners' negative equity is addressed, loan modifications will help only a few.  Better than none, I guess, but this can't go on forever.

Agree or disagree? Tell me what you think.

P.S.

REMEMBER, YOU DON'T HAVE TO PAY ANYONE UPFRONT FOR A LOAN MODIFICATION.