Many homeowners that have an underwater mortgage are looking for a principal reduction in the hopes that they can get a more affordable mortgage principal on their home that has lost a substantial amount of value. Homeowners have obviously grown frustrated when they owe more on their home than their home is worth, so there has been a high demand for solutions to this problem.
Underwater mortgages are occurring more and more across the nation and it’s hoped that the housing prices will stop their decline so that homeowners will be able to better find solutions for dealing with substantial losses to their homes value. The problem with principal reductions is that there are mixed feelings among lenders on whether they should be used or not.
Some lenders have been using principal reductions to assist homeowners with an underwater mortgage, but other banks feel that principal reductions are not practical, fair, and worry that they will cost the mortgage industry a great deal. Lenders say that mortgage principles should not be reduced or negotiated in the vast majority of cases.
There are some lenders who are against principal reduction that do feel that a principal reduction might be warranted if a homeowner lived in an area where they are unlikely to see their home’s value return or if they are struggling to make their mortgage payment due to a loss in the value of their home.
While principal reductions have been keeping many homeowners from simply walking away from their home loan, lenders are asking that homeowners who have an underwater mortgage remain with their mortgage obligation as there are other alternatives to principal reductions.
Homeowners that may be struggling to make their mortgage payment due to an underwater mortgage or anyone who has simply lost a great deal of value in their home may want to contact their lender to ask about what specific assistance might be available to help them in their mortgage.