Homeowners with an underwater mortgage had been seeking principal reductions from many mortgage lenders who are also participating in the Making Home Affordable Program. Homeowners who owe more on their home than it is actually worth are in very frustrating situation and many mortgage lenders, as well as the Obama Administration’s Making Home Affordable mortgage assistance plans have been seeking ways to deal with these situations.
Not all lenders are willing to offer mortgage principal reductions on a wide scale and some have even stated that they do not believe that principal reductions are a good solution when dealing with underwater mortgages. Lenders have also gotten backlash when offering principal reductions due to the fact that homeowners who may have lost value in their home but are still making their mortgage payments may not always qualify for principal reduction when dealing with a lender who offers these plans.
However, alternative plans to help homeowners with underwater mortgages have been made available as many homeowners who either want to simply keep a roof over their head or who want to be rid of a very frustrating situation may have options. For instance, homeowners who have a home loan with Fannie Mae or Freddie Mac may be able to qualify for a form of underwater mortgage refinancing, which can make a home loan payment more affordable.
On the other hand, homeowners who simply want to be rid of their underwater mortgage due to the fact that their home has lost such a substantial amount of value that they will be unlikely to recoup the losses may be able to qualify for a short sale. Some lenders believe that in cases where homeowners are an area that is unlikely to see an increase in home prices or recoup any of the value that was lost, a principal reduction may be warranted. However, some homeowners simply want to wash their hands of a bad situation, and a short sale on their home loan may be one way to do just that.
Homeowners who are struggling with an underwater mortgage have been advised to talk with their mortgage lender or consult the Making Home Affordable website for more information in dealing with their personal underwater mortgage situation.