Homeowners with Bank of America who have an underwater mortgage may be able to take advantage of the Obama Administration’s principal reduction plan, which is part of the home loan modification program. This extended plan of the modification program is hoped to offer homeowners with an underwater mortgage more options in dealing with a house that has decreased in value.
A mortgage principal reduction, as part of the home loan modification program works by having homeowners continue to make payments on their home, but over time, they will see a reduction in the principal owed so that it is more in line with the current value of their home.
Homeowners have grown so frustrated with their underwater mortgages that many have simply walked away from their home as a result. Walking away is done, typically, by those homeowners that wanted to use their home as an investment and feel they are now unable to profit due to a decrease in their home’s value.
Obviously, not all homeowners are going to qualify for a principal reduction but those with underwater mortgages should be aware that these new principal reduction programs are available and may offer assistance.