Homeowners still seeking mortgage assistance options for their underwater home loans may have various opportunities to either refinance their mortgage or gain a principal reduction. Plans like the Home Affordable Refinance Program, the FHA short refinance plan, and state-specific plans implemented from the Hardest Hit Fund by various state housing agencies may allow for individual homeowners to find solutions for their mortgage where negative equity is in place.
Understandably, homeowners who have lost value in their home have been frustrated as numerous financial difficulties have had many homeowners questioning why they are remaining in a home where they owe more than it’s worth. Yet, underwater refinancing programs have helped some homeowners find a more affordable mortgage payment where a loss in property value was present.
However, some financial analysts say that programs like the FHA short refinance plan or other underwater assistance opportunities may fall flat as mortgage servicers, in some cases, will be required to reduce a homeowner’s principal amount. There have been some financial institutions who have offered earned principal forgiveness options, meaning a homeowner who continues to pay on their underwater mortgage will see a drop in their principle over time, but in terms of homeowners getting a percentage of their mortgage forgiven, this option has mostly been limited.
Yet, individual state housing agencies are hoped to provide more opportunities for homeowners who are suffering from an underwater mortgage as certain states have seen a greater reduction in property value than others. It’s hoped that if a homeowner is unable to benefit from an underwater refinancing or principal reduction program from a governmental plan, these state-specific plans from housing agencies across the nation may provide an alternative assistance option for underwater borrowers.