Homeowners with an underwater mortgage have been looking for ways in which to make their home loan payments more affordable. Many underwater homes have caused troubles for homeowners when it comes to paying their monthly mortgage payment and people have been seeking principal reductions in order to make their underwater mortgage payment a little easier on their personal finances.
However, many lenders are unwilling to use principal reductions on large-scale so underwater refinancing options have become available for homes that are either owned or guaranteed by Fannie Mae and Freddie Mac. Traditional refinancing on a home whose value has declined is not possible so many of these homeowners who wanted to refinance for a lower interest rate were unable to do so while rates were at record lows.
Underwater refinancing opportunities are hoped to combat the practice of homeowners simply walking away from these types of home loans. It was reported recently that Fannie Mae would begin strengthening the penalties against homeowners who simply walk away from their mortgage as there are programs which homeowners can pursue outside of foreclosure.
Some forms of assistance that are available are short sale options, underwater refinancing options through the Home Affordable Refinancing Program, and while they are not popular, some lenders are in fact offering principal reductions on underwater homes. There are worries that homeowners who walk away from underwater mortgages will cause housing prices to drop even more, so Fannie Mae says that homeowners who walk away will be unable to obtain another Fannie Mae mortgage until seven years have passed.
Many homeowners argue that there are very few alternatives to walking away and they say some lenders are unwilling to help homeowners avoid foreclosure. There is a consensus among angry homeowners that not enough is being done to offer assistance through programs like home loan modifications, principal reductions, or even underwater refinancing, and homeowners want to see more action from lenders to stop foreclosures.
However, underwater mortgage refinancing for Fannie Mae and Freddie Mac homes is one way in which homeowners may be able to get a more affordable payment. As Fannie Mae, for instance, has stated that homeowners are encouraged to pursue these assistance programs rather than walking away, more homeowners may get the opportunities they need when it comes to making their underwater mortgage more affordable and keeping their home.