Underwater mortgage assistance may be available for some homeowners in the form of a principal reduction as the Obama Administration has been asking lenders to do more to help homeowners in this situation obtain a more affordable home loan payment or avoid foreclosure.
The Troubled Asset Relief Program, or TARP, has allowed many mortgage lenders to help homeowners who are struggling with an underwater mortgage by offering them a principal reduction plan. Many homeowners feel that their home’s price was inflated when it was purchased and they feel that due to the vast amounts of decreases in home values they are deserving of a reduction in their mortgage principal.
There are some lenders who do not feel that using a principal reduction program is going to be beneficial and would rather take alternate routes when it comes to helping underwater mortgage homeowners. However, homeowners who are in an area that are unlikely to recoup any of the value they lost in their home or who are having trouble paying their home loan payment as a result of an underwater mortgage may be able to obtain a principal reduction.
Also, the ability of a homeowner to obtain a principal reduction will depend upon what mortgage lender they have. Homeowners with an underwater mortgage are being prompted to contact a mortgage lender and ask about assistance options that may help them if they are struggling to make their mortgage payment or would simply like to qualify for a principal reduction plan.
There are ways to help homeowners who are struggling to make their mortgage payment and some homeowners who may be frustrated with their underwater mortgage may be able to short sell their home loan instead of default.