Mortgage principal reduction options from the Obama administration through the Making Home Affordable Program are being used by some lenders in order to help homeowners with an underwater mortgage. It’s hoped that in the coming months principle reductions will be more widely used and more homeowners will benefit from this type of assistance.
Homeowners that are suffering from an underwater mortgage often feel that their home was overpriced and they are deserving of a principal reduction in order to make their home’s value more in line with its true market price.
Lenders, for the most part, believe that there are very few cases where a principal reduction should be used. For instance, in areas where homes have seen a great deal of loss in their value and where these homes are unlikely to recoup any of this value, lenders feel a principal reduction may be the best option.
While not all lenders are using principal reductions, homeowners that are struggling with an underwater mortgage and may be having trouble meeting their mortgage payment as a result, are being advised to contact their lender about options available for dealing with their mortgage problem.