The home loan modification program has been prompting lenders to offer principal reductions for homeowners with an underwater mortgage. Homeowners who are in a situation where they owe more on their home than their home is worth are, understandably, frustrated with their situation and want results.
Homeowners who have seen a loss in the value of their home over the past months or years believe this is due to inflated home prices. Homeowners who believe they were sold a house at an inflated price are angry due to the fact that many homeowners have lost a substantial amount of value and may be in a position where they will never be able to regain all of the value lost.
Those who see their house as an investment have grown so frustrated that they have even walked away from their home loan obligation, which can be quite detrimental to one’s credit score. However, there have been principal reductions offered from some lenders and short sale options available to those who want to simply get out of their underwater mortgage obligation without destroying their chances of getting another home in the near future.
Not all lenders are using principal reductions on a wide range of homes, but most lenders agree that in areas where the housing values have dropped at such a rate that their value’s are unlikely to be recouped or where a homeowner is unable to make their mortgage payments because of the loss in their home’s value, a principal reduction may be warranted.
Underwater mortgages, again, are a very tough situation for any homeowner but homeowners are being advised to talk with their lender about principal reductions or other forms of underwater mortgage assistance before simply walking away due to frustration. Many lenders and the Making Home Affordable Program are offering help for those with an underwater mortgage who either need assistance in making their home loan payment or just want to be rid of a home that has sharply decreased in value.