Citigroup homeowners that are struggling with an underwater mortgage may have a principal reduction option available to them in an expansion of the home loan modification program from the Obama Administration. Many homeowners are suffering from an underwater mortgage, meaning they owe more on their home than it’s worth.
Principal reductions are viewed as a necessity in a housing market that has seen homes decrease in value in most areas of the country. There have also been steep decreases in the value of some homes that have put homeowners owing a substantial amount of money on a home that isn’t even close to the value of the mortgage.
Many argue that this is just the price that homeowners must pay and there should be no special treatment for homeowners just because their home lost value rather than gained, but some homeowners have lost tens-of-thousands of dollars or more on the value of their home so these circumstances are different than an ordinary drop in value.
Citigroup, along with other lenders have been asked to increase the number of principal reductions for homeowner suffering from an underwater mortgage. While there are many homeowners that may not get a reduction in their mortgage principal, homeowners are advised to at least talk with their lenders about opportunities available to them.