Mortgage rates on the rise, unemployment claims fall and loan modification applications drop

For years now we have dealt with the fact that our economy has been struggling and every year things seemed to of gotten worse.  Lenders are now relaxing a little bit because loan modifications have actually dropped in the last quarter.  Due to the foreclosure fraud scandal and "robo signing" big lenders like Bank of America, Wells Fargo and JP Morgan and Chase freezing foreclosures over the holidays.

Unemployment is down and slowly the economy is finally gaining a little bit of steam.  Question is will the real estate market actually be able to gain some momentum?  Wells Fargo announced it will be targeting homeowners in California to modify the option arm loans or pick a pay loans.  So even though foreclosures have stalled a little bit, unless there is some serious jobs grow, the real estate market is just going to continue to fall.  So this minor breathier the lenders are seeing now will probably not last forever.  Next month is when the Obama's administration will be reviewing the Home Affordable Modification program, Fannie Mae and Freddie Mac to see if the US government can continue to guarantee mortgage loans.

The fact is housing is expected to continue to fall another 6% at least in certain areas, the issue is interest rates are beginning to edge up and even though they are still extremely low, lender guidelines are still very tough.  Many articles have been written about the governments Home Affordable Modification Program and the disappointing results of how many homeowners it hasn't helped.  If you have not applied and you are facing foreclosure or are only a month behind and refinancing is not an option for you, despite all the talk about the program not reaching as many people as was projected, it still has actually helped thousands of homeowners keep and stay in their home.  Question is will people continue to walk away due to the value of their home?

Even though the Hamp program encompasses a reduction in principal it isn't offered widely enough to help homeowners and not many investors are interested in even making it an available option. More and more lenders are turning to their own internal modifications and even though the government program offers the lending services like American Home Mortgage Services, ASC, Wells Fargo and Bank of America incentives to approve homeowners for the Hamp program many of them are turning away from the program.

Loan modifications are still a variable option if you want to lower your monthly mortgage payments and interest rates.  Considering mortgage rates are slowly on the rise and are now hovering below 5 percent, it certainly would not hurt to try.