Unfortunately, home foreclosures continue to have adverse effects on property values throughout our community and on homeowners who have been striving to make their monthly mortgage payments in this tough economy. Many wonder how foreclosures affect those homeowners who continue to pay their mortgages each month. In essence, foreclosures reduce a community’s home prices and have further unfavorable consequences on the economy as a whole. For example, in some studies, foreclosure on a home has been found to reduce the prices of nearby homes by as much as 9 percent—creating the potential that even borrowers who make every payment on their home mortgage suffer from foreclosures in their community. (Homeowner Affordability and Stability Plan Fact Sheet: http://www.treasury.gov/initiatives /eesa/homeowner-affordability-plan/FactSheet.pdf.)

Along with foreclosures, our slow economy’s unemployment rate has affected the real estate market and continues to affect many homeowners who are struggling to keep up on their mortgage payments. To combat the grave effects that foreclosures and the economy are having on the real estate market, loan modifications have become increasingly popular among struggling homeowners.

One of the biggest reforms to the current loan modification system has been the federal government’s Homeowner Affordability and Stability Plan (“HASP,” but also known as “HAMP”), which was enacted to help qualified homeowners restructure and refinance their mortgages to avoid foreclosure. The HASP targets those homeowners with a “high combined mortgage debt compared to income,” or those who are “underwater” on their home (those with a mortgage balance that is higher than the current market value of their homes). Even if you do not qualify for the governments modification program, many lenders have in-house modifications that an experienced attorney can assist you in applying for.

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