If you are a homeowner, then it’s likely you’ve felt the crunch. The ugly mortgage payments. The fact that your neighbor short sells his house for a fraction of its former worth. Or that the other neighbor up and leaves…giving you a lovely foreclosure in your neighborhood along with a likely case of blight due to a trashed house and yard.

Good times.

But wait. There’s this program. Have you heard of it? It’s called “Making Home Affordable.” (We’ll forgive the improper grammatical phrasing and basically awkward sounding name). You can go online and answer a few questions and see if you qualify for a possible loan modification, refinancing or other foreclosure preventative measures. Exciting, right?

But the reality is something that is not exciting.

If you truly cannot make your house payments, then you gotta do what you gotta do. Period. You need to pull out all the stops to see what you can work out with the bank to either keep your house…or perhaps decide to walk away. Over the past year, I’ve known several people to file bankruptcy, short sell their homes or look towards a deed in lieu of foreclosure as their only option to be able to make it day to day. These are not people who overextended themselves. They experienced divorce, job loss, decrease in wages and were hit by increasing interest rates.

But there are also a lot of people who feel the crunch and yet they can squeak by. And I should probably capitalize the SQUEAKING. So what about these people? What about the people who can make the payment but it’s TOUGH? What about the people who want to adjust their payments but can’t?

Well…according to the Making Home Affordable program, they still may be able to take advantage of it. However, it is not without its issues.

Imagine you submit your paperwork. Your bank finally gets back to you and you are told to start your decreased mortgage payment for a trial period. Sounds scary, but if you make the full payment (rather than the decreased trial period payment) you negate the whole modification process.

So you make your decreased payment. And your credit takes a hit. You tell yourself you don’t really need to have that credit score in the 700s…because you have no intention of buying anything in the near future anyway.

Except there ARE repercussions. Your current creditors can (and probably will) lower your available credit due to your new lowered score. They will also most likely raise your APR to extraordinary heights since you are now considered a risk. Lovely.

And then, months after making said trial payments, you are denied the final loan modification by your bank. You just don’t qualify. And now you get a letter saying you are in arrears (that difference in the reduced payment compared to your original mortgage payment over the duration of the trial period) and you need to cough up the money (typically in the $$ thousands) within a week or the bank will begin the foreclosure process.

Again, good times.

There are people out there who are losing their homes when they are trying to do the right thing. It’s BS and it’s infuriating.

I would love to do a modification. But we won’t chance it. And we can’t refinance…thanks to recent short sales and foreclosures in the area, our home is worth 1/2 of what we paid for it.It would never appraise at what we still owe.

This real estate crunch is a joke. It’s all a bunch of numbers on a computer screen for the banks. Here’s a simple idea that will never be implemented: How about EVERY home is re-valued at CURRENT MARKET VALUE? Everyone gets the mortgage re-worked to what the home is currently worth in today’s market. How many foreclosures would be stopped at that point. How many families would be able to afford to stay in their homes?