Posted On: January 21, 2010

Disappointing Relief for Homeowners Trying to Avoid Foreclosure

A Sacramento Bankruptcy Attorney speaks on homeowners and foreclosure...

A recent New York Times editorial I read in my Sacramento Bakruptcy Law Office commented on just how few people have benefited from the current administration's program to help families at risk of losing their home by lowering payments through loan modifications or refinancing loans. It was predicted that up to nine million families would benefit by the end of 2012, yet in 2009, only 66,465 loans were successfully modified, and through last November only 155,700 loans had been successfully refinanced. With an estimated 2.4 million borrowers expected to lose their homes in 2010, it doesn't appear that the current program, despite good intentions, is working. According to estimates on, it would take 100,000 successful loan modification per month, to significantly counter the treat that 2.4 million foreclosures poses to the economy.

One of the biggest flaws of the current loan modification program, by reducing the interest rate on the loan, is of limited help to borrowers who owe more on their homes than they are worth. Instead, reducing the loan's principal balance is more helpful because it not only lowers monthly payments, it restores equity; and it has been found that having equity reduces the likelihood of default on a modified loan. Reducing the principal, however, is likely not something that most lenders would agree to; particularly if there is more than one loan on the residence. Treasury officials have stated that they continue to review the administrations anti-foreclosure effort and consider alternatives; hopefully more homeowners will see relief soon.

If your home is at risk of foreclosure, regardless of whether or not you are seeking to modify the loan, you may consider discussing your options with a bankruptcy attorney.

If you have questions regarding Bankruptcy in Sacramento please contact us at (916) 492-6020 in Sacramento or (916) 724-1690 in Roseville for a free consultation or visit and we can connect you with one of our experienced Sacramento Bankruptcy Attorneys. After you have spoken with one of our Sacramento bankruptcy attorneys, we can schedule you for a free face to face appointment in an office location nearest you. Our team of Sacramento Bankruptcy Lawyers can assist you with all aspects of your bankruptcy or legal debt settlement case. If you have questions about filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, or would like to learn more about bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, asset protection, discharging a debt, etc. we can help! We have bankruptcy attorneys located throughout California and Oregon who can assist you with all of your debt resolution questions. Please feel free to complete our free online bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy. We look forward to hearing from you, Sacramento!

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