The Obama Administration’s new wave of foreclosure prevention initiatives has many wondering how they can help. While home loan modifications have been met with mixed results, these new plans for foreclosure prevention are set to help unemployed homeowners and those with an underwater mortgage.
Underwater homeowners may now have easier access to principal reduction programs that could help in keeping homeowners with an underwater mortgage from simply walking away from their home. This plan requires on-time payments for a set amount of time, typically a few years, but the homeowner will see their principal reduce the more they pay.
Homeowners that are unemployed may be able to take part in a forbearance program that will drop the amount due on their mortgage substantially or the entirety of their mortgage payment suspended for three to six months. During this time unemployed homeowners are hoped to either find employment, save up money from any income they have, or discuss selling their home with their lender.
While not all lenders are offering these programs and not every homeowner seeking assistance in their mortgage is going to get it, as we have seen from troubles in the home loan mortgage modification program, these new foreclosure prevention plans from the Obama Administration are out there, so homeowners will have to talk to their lender about the options available to them.