Principal reductions are available through a mortgage assistance initiative from the Obama Administration, which hopes to help more homeowners with their mortgage troubles. Underwater mortgages have become a problem as of late and there have been many homeowners crying out for solutions.
The Obama Administration has extended their plan for the Making Home Affordable Program to give underwater homeowners a principal reduction. This usually is done if the homeowner will stay with their mortgage and make timely payments for a set period, during which the homeowner would see their mortgage principal reduced or erased completely.
These plans and their implementation may differ from lender to lender, but underwater homeowners looking at a mortgage worth more than their home’s value are asking for any help they can get, as many homeowners have seen their home value drop substantially.
Not all, but many of the top lenders in the home loan modification program are working with homeowners to get these principal reductions in place and it is now hoped that homeowners will stay with their mortgage obligation, opting for the principal reduction rather than walking away from their home.