Wells Fargo representatives have stated that principal reductions for underwater homeowners aren’t a solution to homeowners that are struggling to make their mortgage payment and should be used sparingly. Many lenders echo this sentiment as they feel that principal reductions are unnecessary and unfair in many cases.
Homeowners that are struggling in their mortgage payment have options with the Home Loan Modification Program and refinancing. However, those who have an underwater mortgage and are still able to make their mortgage payment don’t need help, according to many lenders.
There are homeowners with an underwater mortgage that want their principal reduced simply because their home has lost value and they want to see a lower principal so that they might be able to profit on their home in the future.
Lenders argue that homeowners who want a principal reduction typically view their home as an investment rather than a place to live. This can be troubling for lenders as these types of homeowners are asking that they be able to profit from their investment and not lose.
However, underwater homeowners that are struggling to make their mortgage payment may have more options for refinancing their home or getting a home loan modification, but these underwater homeowners are being advised to talk with their lender to see what’s available, as Wells Fargo and other top financial banks aren’t on board with specific programs.