Home loan principal reductions are being sought by many homeowners who are experiencing an underwater mortgage. Owing more on the home than the home is worth is a very frustrating situation and it is for this reason that the Obama Administration has asked that lenders make more efforts to help homeowners in these cases by offering principal reductions.
However, many lenders said that they would be unwilling to use principle reductions on a wide scale or for the majority of homeowners with an underwater mortgage. Those lenders who are opposed to principal reductions said that only in cases where a homeowner is having trouble paying their home loan payment or in areas where homeowners are unlikely to recoup any of the value that was lost in their home will a principal reduction be warranted.
Lenders are offering alternatives to principal reductions for those homeowners who may be having trouble meeting their mortgage payment. Lenders who are looking for principal reductions usually fall into two categories and it’s more likely that a homeowner who is having trouble meeting their mortgage payment due to a decrease in their home’s value will find assistance.
Homeowners that are looking for a principal reduction in order to give them the option to make a profit if they choose to sell in the future may not be able to qualify for a mortgage principal reduction. Homeowners that are able to make their mortgage payment may not be able to get a lower mortgage principal as many lenders feel that a reduction in a home’s value is simply a chance that a homeowner took when they bought a home.
There are some short sale options available from lenders that may offer homeowners with an underwater mortgage the option to get out of a bad situation. However, no one argues that an underwater mortgage is a difficult situation and it’s reasonable to see why homeowners are frustrated. Yet, anyone who is having difficulty with their mortgage payment due to an underwater mortgage is being advised to contact their lender for assistance options that may be available.