Principal reductions are being called for from homeowners with Wells Fargo and other lenders as underwater mortgages become more and more of a problem. Homeowners are growing frustrated with owing more on their home than their home is worth, so these mortgage principal reductions are hoped to remedy that problem.
Homeowners that qualify for a mortgage principal reduction will see a reduced principal if they keep their mortgage payments current over a specific period of time. Homeowners that see their home as an investment are troubled because they feel that by the time they pay off their home they will still be unable to make a profit if they choose to sell due to decreased values.
Mortgage principal reductions aren’t popular with some lenders and there are analysts and homeowners that disagree on the subject as well. Homeowners that are looking for principal reductions say that since the price of their home must have been inflated in order to see such a drop in value, they feel a principal reduction is in order.
While not all homeowners are going to qualify for a mortgage principal reduction, underwater homeowners should take comfort in the fact that these new mortgage assistance options are available.