The loss of value in homes across the nation have created underwater mortgage situations which have left many homeowners struggling to make their mortgage payments. In areas or instances where homeowners have seen the value of their home drop and they are left owing more money on their home than their home is worth has created trouble in certain cases and have many homeowners wondering if they can remain in their home.
While some homeowners have grown so frustrated that they have simply walked away from their mortgage, underwater assistance plans have been made available to aid homeowners who are struggling with their underwater home loan. Solutions like principal reductions, underwater refinancing options, and even short sale plans have allowed many homeowners to deal with their underwater mortgage without losing their home or walking away.
There are certain lenders who have offered earned principal forgiveness programs in which homeowners may partake of and, if they continue to make their payments, will see their mortgage principle reduced over time. Also, certain refinancing opportunities may be available for homeowners through plans like the Home Affordable Refinance Program that is available for homeowners who have a home that is owned or guaranteed by Fannie Mae or Freddie Mac. Programs like these are set in place to give homeowners the incentive to stay in their home when they can’t afford the payments or modify their loan so that their monthly obligation will be more affordable.
In instances where homeowners are simply unable to continue paying their home loan or have lost so much value that it’s unlikely they will recoup what was lost, short sales have been used as a way to provide homeowners a route of escape without doing a substantial amount of damage to their credit score. Obviously, when homeowners have walked away from their home loan obligation their credit score takes a hit and many mortgage servicers may refuse to work with homeowners who have strategically defaulted for quite some time.
While underwater mortgage difficulties continue to plague some homeowners there are now more options available for those who are struggling with a home loan situation where they owe more than their home is worth. Homeowners are often advised to speak with their mortgage servicer or consult the Making Home Affordable Program for more information on governmental assistance plans for underwater home loans.