Homeowners who have a second lien on their home loan have often found that short selling is more difficult when this is the case. Secondary mortgage holders often have been unwilling in the past to allow short sales to go through since they will be losing out on the deal.
Incentives from the Obama Administration that will hopefully prompt more second lien holders and primary mortgage lenders to make short sales in cases where a homeowner has seen a loss in value of their home. Underwater mortgages are becoming more difficult to manage as frustrated homeowners claim there may be little chance for them to recoup any of the value lost.
Principal reductions, while offered by some lenders, are not as popular among the other mortgage lenders since banks feel that this is an unfair practice in the majority of cases. Unless a homeowner is having trouble making their mortgage payment or lives in an area where housing prices are unlikely to recover much of what was lost, many lenders feel principal reductions should not be used.
However, any homeowner who is struggling with an underwater mortgage is being advised to talk with their lender about assistance that may be available. While again, not every lender is willing to use principal reductions and there can be difficulties with primary and secondary mortgage holders when it comes to short sales, homeowners must explore all their options in dealing with an underwater mortgage.
Secondary mortgage lenders have been reportedly more willing to allow short sales to go through on homes with an underwater mortgage, in some cases, but there is no guarantee and it will be dependent upon the secondary mortgage holder as to if this is an option. Yet, homeowners are still being advised to seek out any assistance they can get in dealing with this troubling situation by contacting their mortgage lender.