Homeowners that are in the difficult situation of facing an underwater mortgage are often struggling in a variety of ways when they owe more on their home than their home is worth. Some homeowners with an underwater mortgage are having trouble meeting their monthly mortgage payment while others are simply in a situation where they are unlikely to see an increase in the value of their home in the near future.
It’s for this reason that some lenders and the Making Home Affordable Program have begun principal reduction plans which are set to help homeowners who may be paying on an underwater mortgage. While the principal reduction plan from HAMP has not been adopted by all lenders, there are some banks that are willing to use this method of mortgage assistance.
Lenders who are unwilling to use principal reductions on a wide scale believe that there are some cases that a principal reduction is warranted and if a homeowner with an underwater mortgage is in need of assistance but not in one of those specific situations, these lenders have alternatives to help them.
Homeowners that might not be able to meet their mortgage payment or are in an area where the decrease in their home’s value was so substantial that they are unlikely to see any of that value regained may be able to obtain a principal reduction from their lender. Again, many lenders may be willing to use principal reductions more than others, but all lenders agree that there are certain cases where a principal reduction is needed.
Homeowners that are facing an underwater mortgage are being advised to contact their lender because it’s only by working with their bank that they may be able to find a solution that is beneficial for them. Some homeowners who may want to simply be rid of their mortgage might find that their lender will work with them to short sell their home, while those who just want to keep their home should be able to find the help they need in one form or another.