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Fearing foreclosure? A loan modification may help

The Bank of America is stepping up its foreclosure efforts a year after announcing that it would move to halt foreclosures in every state. For the month of August the lender mailed 200 percent more default notices to homeowners than in July.

At this point, some predict that other banks will also follow suit, and that the overall number of people being served with foreclosure notices will continue to grow.

There is concern that an increase in the number of foreclosed homes added to the market will further depress housing prices and help to drive down the economy to even lower levels. Some economists also worry that these lower housing prices, combined with lower stock prices, could even push the country into a double-dip recession.

Bank of America will likely also not be the only lender to step up foreclosures, as a number of lenders temporarily suspended foreclosures after the robo-signing scandal broke. Since then, many banks have been working to try and improve the paperwork process, which means that as systems are improved, more and more foreclosures could start to once again be processed.

However, for many homeowners who know they either are or will be struggling to make their monthly mortgage payments, help may be available through a loan modification through the federal Home Affordable Modification Program, commonly referred to as HAMP.

With HAMP a homeowner may be able to negotiate lower interest rates and extend the life of a mortgage. By doing this, homeowners may be able to avoid foreclosure.

One thing to keep in mind with HAMP though -- or really any attempt at receiving a loan modification -- is that the entire process can be rather confusing. And while for some a modification to their existing mortgage may be the best answer, for others they may not qualify and other debt relief solutions could really be the best choice.

If you are someone who is struggling to make your house payments, it's best to speak with a knowledgeable nonprofit debt relief counselor or bankruptcy attorney to learn what financial solution might work the best for you.

Source: Huffington Post, "Bank of America Foreclosure Notices Reportedly Spike In August," Bonnie Kavoussi, Sept. 13, 2011

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