Many homeowners that have lost value in their home find themselves with an underwater mortgage, which is a case where they owe more on their home than their home is worth. This can be a frustrating situation for any homeowner who may view their home as an investment or may be having trouble paying their mortgage payment because they have lost value in their home.
There are some lenders who are using principal reduction programs in order to help homeowners in this troubling situation. Many homeowners have asked for a principal reduction on their mortgage simply because they feel that with such widespread drops in home prices that lenders were selling homes with inflated prices.
Some lenders are unwilling to make principal reductions in the majority of underwater cases, but even lenders who may be opposed to principal reductions are willing to make them in certain cases. In a situation where a homeowner may not be able to pay their mortgage because they lost value in their home or if a homeowner is in an area where they are unlikely to regain the value that they lost in their home, a principal reduction may be used.
However, some lenders are using alternate programs or helping homeowners short sell their underwater mortgage. Homeowners that feel their home is an investment are looking for ways out of their underwater mortgage when they believe the situation may have become hopeless.
Despite many difficulties for underwater mortgage homeowners it is still being advised that anyone who is struggling with an underwater mortgage contact their lender and see what options may be available for helping them in dealing with a home in which they owe more on the mortgage than the house is actually worth.