Property values have declined in numerous areas across the nation over the past months and have put countless homeowners in an incredibly frustrating situation concerning their home loan. There are some homeowners who have been able to continue making their mortgage payments and are hoping that their property value will increase in the near future, but others have had trouble making their mortgage payment as a result of the type of home loan they may have or the severity of their underwater situation.
While there have been programs to help homeowners avoid losing their home to foreclosure by allowing underwater homeowners to refinance their loans or by offering principal reductions, certain foreclosure alternative opportunities may be available to homeowners who are in a situation where they can no longer combat their home which has a severe negative equity problem.
Homeowners who have attempted to make their mortgage payments despite being in an underwater mortgage situation have found, in some cases, they are simply unable to continue meeting their mortgage payment. There have been lenders, like those working within the Home Affordable Foreclosure Alternatives Program, who have allowed homeowners to short sell their home as a way to escape their underwater situation.
Homeowners who have purchased or participated in short sales are those who have been able to find a buyer for their home and, despite selling the home at loss, have had their financial institution consider the short sale as full payment for their mortgage debt owed. Homeowners previously had argued that mortgage servicers have continued to pursue them and collect on either penalties or the remaining balance of their mortgage, but the Home Affordable Foreclosure Alternatives Program was implemented so that servicers would erase remaining debt owed in an underwater situation.
There have also been similar cases where homeowners have used a deed in lieu of foreclosure plan in order to escape their underwater mortgage without being pursued by servicers. While these types of alternative programs may be unavailable for some, homeowners who have attempted to save their home through a modification, but were unsuccessful and then pursued a short sale, only to be unable to find a buyer, may be able to surrender their home to their service if their underwater mortgage has become too problematic and foreclosure may be inevitable.
Not all homeowners have been able to benefit from these foreclosure alternatives, as there are those who have stated servicers were simply unwilling to offer them the opportunity to participate in these plans. Yet, advisers often suggest that homeowners either consult their mortgage servicer or a reputable housing counselor as to what options may be available for a situation where they owe more on their home than it’s worth due to negative equity.