Has the effort to improve loan modification programs decreased the chances of housing price decline? Experts have stated that not only does loan modification efforts slow price decreases it might also take a longer time for the housing market to reach bottom limits. At the end of 2009 we saw a 5% decline instead of a 7% decline in home prices.
The new program introduced last month is offering incentives in order to motivate lenders and investors to reduce loan balances for borrowers that are underwater. Homeowners working on a loan modification under the Home Affordable Modification Program might qualify for a loan write down as well.
When these programs did not exist about 2.25 million homeowners lost their homes to foreclosure or short sales. After the introduction of the modification and loan write down programs there is an estimated 350,000 less foreclosure and short sale sales. This means that more homes are being sold at regular value rather than decreased amounts due to the inventory of bank owned homes.
There is a better chance lenders will write down loan balances compared to a year ago due to signs of the housing prices stabilizing. Not everyone agrees to these findings, a housing economist stated that housing prices could possibly fall 10% to 20%.
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