Many homeowners who are struggling with an underwater mortgage have been seeking mortgage principal reductions on their home loan. However, there are many lenders who feel that using principal forgiveness options is not something that should be an “across-the-board” solution in dealing with these types of mortgages where homeowners owe more on their home than the home is worth.
Yet, homeowners are asking for principal reductions are saying that more needs to be done to assist homeowners who have seen a substantial loss in their home’s value. The problem of underwater mortgages has grown so severe that some homeowners have simply walked away from their home in what is being termed a “strategic default” and many lenders are looking for ways in which homeowners can handle an underwater mortgage without taking this route.
Again, there are reports that many lenders are not offering principal reductions but, even in cases where a lender may be unwilling to use a principal reduction, there are alternatives when it comes to assisting a homeowner with an underwater mortgage. Many lenders have said that in cases where a homeowner is unable to meet their monthly mortgage payment due to the loss in their home’s value or if a homeowner is in an area where they are unlikely to regain any of the value in their home that was lost, a principal reduction may be used.
However, options like short sales have become more popular for homeowners who simply want out of their mortgage obligation and many lenders are trying modifications or underwater refinancing for homes that are owned or guaranteed by Fannie Mae or Freddie Mac so that homeowners who simply want to make their underwater mortgage more affordable can do so.
Homeowners with an underwater mortgage are often advised to talk with their lender or consult the Making Home Affordable website for more information about underwater mortgage assistance programs. Some lenders even have in-house programs that can assist homeowners who are struggling to meet their monthly mortgage payment due to having an underwater mortgage.