MarketplaceConsumer Protection


How long will loan modification programs exist?

Posted at 9:50 AM, Mar 02, 2018

This article is written by Peters and Associates


I heard no one can get loan modifications after this year — that the programs expire. Is that true? — Bruce D., of Henderson

No. It isn’t.

When people talk about loan modification or foreclosure alternative programs expiring, they usually are referring to Making Home Affordable (MHA) programs, were launched in February 2009. The Home Affordable Modification Program (HAMP) was included as a large part of the MHA package and typically is what people think of as a “loan mod.”

The MHA, and all it includes, was slated to expire Dec. 31, 2012, but has been extended and modified several times. The current MHA expiration date is Dec. 31, 2016.

Moreover, there are several programs available to homeowners that aren’t part of the MHA package. They include published and unpublished internal modification programs (specific to each bank) and legal outcomes like the National Mortgage Settlement. These options often are better than the standard MHA options and don’t necessarily have expiration dates.

This doesn’t mean it’s OK to wait.

Foreclosures are up in Nevada, and loan modifications, short sales and even refinances take time.

Modifications alone can take six to 12 months to be approved. This means that while modifications do not expire this year, the deadline to get MHA/HAMP applications submitted for approval by the 2016 expiration is fast approaching.

Note: Congress has not extended the Mortgage Forgiveness Debt Relief Act (MFDRA), which expired Dec. 31, 2014. The MFDRA mandated that up to $2 million of forgiven debt on a primary residence not be considered taxable income. Unless the act is extended, mortgage debt eliminated in 2015 via loan modification, principal reduction, short sale or second mortgage settlement may be considered taxable income. For more information, consult your tax adviser. Also, see IRS Publication 4681 and IRS News Release IR-2008-17.

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Please note: The information in this column is intended for general purposes only and is not to be considered legal or professional advice of any kind. You should seek advice that is specific to your problem before taking or refraining from any action and should not rely on the information in this column.