Homeowners with an underwater mortgage had been seeking principal reductions from their lender, but there are many who feel that principle reductions will not be a widely available option for homeowners who are continuing to see a loss in their home’s value. There are some lenders who have stated that a principal reduction should only be used in specific cases, like instances where a homeowner can no longer afford their monthly mortgage payment due to the decrease in their home’s value or if a homeowner is in an area where they are unlikely to recoup any of the value that was lost in their home.
While the use of principal reductions may vary from lender to lender, there are also underwater mortgage refinancing opportunities for homeowners who are in need of a more affordable home loan payment. Homeowners with an underwater mortgage have not been able to take advantage of low mortgage interest rates that have been available over the past months and, as a result, the Home Affordable Refinance Program was set in place to help those homeowners who are in this situation.
Under the Home Affordable Refinance Program homeowners who have a home loan that is owned or guaranteed by Fannie Mae or Freddie Mac may be eligible for refinancing on their underwater mortgage. Many homeowners have been seeking either a lower interest rate or a simple lower monthly mortgage payment on their home loan when their home has lost value and it has become difficult for them to meet their mortgage payments. Many of these homeowners would simply like to refinance to a lower, fixed rate mortgage, but without this underwater refinancing program many have been unable to do so.
While there has been many critics who are unhappy with these plans that have stemmed from the Home Affordable Modification Program and the mortgage lenders who have been charged with implementing these programs, it’s still helpful for a homeowner to contact their mortgage lender first if they are having underwater mortgage troubles. There are resources online, like the Making Home Affordable website, but homeowners who have trouble with their mortgage lender and turn to alternate sources of assistance need to beware of any scams that may offer to help them with their underwater mortgage but have underlying, malicious intentions.