Homeowners who have been facing an underwater mortgages have sought out refinancing opportunities and principal reduction options over the past months. Understandably, homeowners who owe more on their home than their home is worth are in a difficult position, but there have been assistance programs available to aid homeowners in this predicament.
Programs like the Home Affordable Refinance Program may allow homeowners to refinance if they are current on their payments and their home is owned or guaranteed by Fannie Mae or Freddie Mac. Also, the FHA implemented a program that allows homeowners to not only refinance for a more affordable home loan payment, but also gain a principle reduction from their mortgage servicer, if they qualify for this program.
While there have also been opportunities for homeowners to short sell their home, it’s been reported that some servicers are limiting the number of foreclosure postponements homeowners may have. While short sales have allowed homeowners to escape their underwater mortgage troubles, in cases where a short sale opportunity is not evident or imminent, servicers may proceed with a foreclosure sale.
There are some indications that home prices may be increasing in certain areas across the nation, but the severity of loss some homeowners have sustained may take years to be corrected, which understandably is quite frustrating. However, it’s hoped that homeowners who can take advantage of these refinancing opportunities, principal reduction plans, or who may simply benefit from short selling their home will be able to better handle their underwater mortgage situation and avoid actions like strategic defaulting, which could greatly harm a homeowner’s credit history.