Underwater Mortgage Assistance Plans–Refinancing And Principal Reductions Available But Will They Help Homeowners?

Homeowners have found themselves in a difficult situation where they owe more on their home than their home is actually worth, and as a result, many of these homeowners have had a difficult time meeting their mortgage payments. While some homeowners with an underwater mortgage have been unable to pay their monthly home loan payments, others have grown so frustrated with owing more on their home than it’s actual worth and have simply walked away.

Yet, underwater mortgage assistance plans that have allowed for refinancing opportunities or principal reductions have been available in some cases to homeowners with an upside down mortgage. Understandably, an underwater home loan situation is quite difficult, but refinancing plans like those from the FHA and the Obama Home Affordable Refinance Program have aided some underwater homeowners by offering more affordable mortgages.

Also, homeowners have sought principal reductions, but mortgage servicers are unwilling to lower a mortgage principal amount, in most cases. While there are some state specific programs which may help homeowners find principal reduction options or plans like the FHA short refinance program which could bring principal reductions if lenders are willing to work with homeowners, there are those who feel these underwater mortgage assistance plans may not be helpful.

While, refinancing or principal reduction options could aid a homeowner with an underwater mortgage through a more affordable solution to their predicament, analysts say that in cases where mortgage servicers must either reduce a mortgage principal or work with homeowners to find a more affordable mortgage payment solution, success may be minimal at best.

Again, there have been servicers who were unwilling to offer principal reductions or refinancing opportunities to homeowners, but these plans are still available to certain individuals. Numerous foreclosure prevention and alternative plans have been made available to homeowners, like those with an underwater mortgage, but plans which require primary or secondary mortgage servicers to take a loss may not be as easily attained for some homeowners.