Bank of America homeowners have been having trouble with their home’s dropping in value and as a result the Obama Administration has set forth a principal reduction plan that, when put into effect, is going to help homeowners that owe more on their home than their home is worth.
There are some lenders that don’t like the idea of a principal reduction plan being used to provide assistance for underwater homeowners. These lenders, while unwilling to drop mortgage principal amounts, still have alternatives to underwater mortgage problems.
The home loan modification program has programs like HARP, the Home Affordable Refinance Program, which is set in place to allow underwater homeowners to refinance their underwater mortgage if they are struggling to pay their home loan.
While Bank of America has stated they are willing to use principal reductions, and other lenders like Citigroup have said they have been using principal reductions, lenders that are against this form of modification say that there are very few cases where principal reductions should be used.
Homeowners that can afford their mortgage payment, according to many lenders, shouldn’t get a principal reduction, but homeowner’s that are struggling to pay their underwater mortgage or who live in an area where their home may stand little chance of regaining value may need a principal reduction.
Despite the mixed feelings on underwater mortgage principal reductions, homeowners with an underwater mortgage are still being advised to contact their lender about assistance options available for anyone struggling with an underwater mortgage.