Homeowners with an underwater mortgage are seeking help from the Obama Administration’s principal reduction plan. Many homes have lost significant value and are now worth less than the mortgages attached to them, so this has caused a frustrating situation for many homeowners that are in this position.
However, the Obama Administration has been asking lenders to do more for homeowners that have seen a big loss in their home’s value and principal reductions is one method of dealing with these underwater homes.
Those homeowners that are put into a principal reduction plan are asked to continue making payments on their mortgage and if they keep their payments current over a set period of time they will see their mortgage principal begin to reduce to a point more in line with their home’s current value.
This principal reduction plan is part of the home loan modification program and is hoped to help underwater homeowners out of a bad situation. Homeowners that are with the big lenders in the home loan modification program may want to contact their mortgage holder, however not all banks are on board with principal reductions at the present time.