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It was easy to jump on the bandwagon two years ago and accuse the banks of being cold, cruel, callous, and indifferent to homeowners' plights. Millions of homeowners were struggling to make ends meet, to pay their mortgage, and to stay in their homes and yet millions more were facing foreclosure. The mantra during President Obama's election campaign and early months of his presidency was that banks weren't doing enough to help these struggling homeowners.

The numbers are in

Well, the news can be sometimes deceiving, but the truth is that banks have helped more homeowners stay in their homes than all of Obama's policies put together. The basic principle for banks is that it is poor business sense to continue to foreclose on one home after another after another. The bank is responsible for property taxes, repairs, upkeep, maintenance, and reselling of the home and these numbers begin to add up significantly in short order.

As a result, banks are doing more than twice the number of loan modifications than the Obama Administration's signature Home Affordable Modification Program (HAMP). While this should certainly be good news for homeowners across the country, consumer advocate groups warn that the terms of the modification process may not be as good as what some homeowners have received through the HAMP program.

Looking at the fine print numbers

HAMP originated home loan modifications are generally engineered to keep monthly payments down to 31% of the homeowner's pre-tax income. Some of the bank initiated modifications may not be enough for the homeowner to be able to afford and sustain the payments throughout the term of the loan. It's important to evaluate these terms before deciding whether to pull the trigger and move forward with the modification or possibly move onto the government program, if they can even qualify.

Reducing interest and principal

Many banks were in the business to simply tack on any missed monthly payments to the end of the loan period. This helped some homeowners recover, but for the most part, all this did was delay the inevitable. After all, if the homeowner couldn't afford the monthly payment before, then odds are they weren't going to be able to afford it later on, either. The idea in a loan modification is to lower the interest and the principal so that the monthly payments are more manageable.

With the decrease in home values throughout the country during the past three years, many homeowners have found themselves upside-down in their mortgages, meaning they owed far more than the home was even worth anymore. Banks finally took notice of this and began to work with some homeowners to modify the loans.

Crediting the President

While more banks are taking the initiative in modifying loans, they also acknowledge that the President's HAMP program laid the groundwork for them to follow. Before HAMP, there was no industry standard on loan modifications and each bank was left to fend for itself in the rough waters, trying to navigate for profit while at the same time balancing the desire to keep as many homeowners in their homes.

As a result, more than 78% of the bank in-house loan modifications were found to involve adjusting interest rates or principal reductions. This information was formulate by the Hope Now foundation. Still, there are more consumer advocate groups that are calling on banks to do more and to help more homeowners.

It's clear that the housing industry is struggling severely and foreclosures continue to mount every month. With the Federal government in serious debt trouble, it will be incumbent upon the banks to step up and make the sacrifice, not only for themselves, but also for the homeowners, and the housing industry as a whole.