Short sales have often been an option that homeowners with an underwater mortgage have attempted to use in order to erase their bad mortgage situation. Ideally, homeowners who are facing an underwater mortgage and are unable to find the affordability they need or cannot gain a principal reduction which could help them when it comes to their mortgage cost have been able, in some situations, to sell their home at a loss and have their mortgage servicer see this as full payment of their debt.
Yet, there are concerns among homeowners who feel that some financial institutions have been difficult concerning short sales on underwater home loans as there are some homeowners who have had a difficult time in getting their servicer to accept a short sale. Obviously, not every homeowner with an underwater mortgage may qualify for a short sell even if they find a buyer, as some homeowners have attempted to simply erase their underwater mortgage burden even when they were in a situation where they could pay their underwater mortgage payment.
Plans like the Home Affordable Foreclosure Alternatives Program are one of the primary means through which homeowners work towards achieving a short sale, but again, servicers must approve the sales and have, in some cases, denied homeowners the opportunity to sell their home in an underwater situation. This has led to frustrated homeowners simply walking away from their mortgage, which can be problematic as some financial institutions may be able to pursue the homeowner for funds which were lost resulting from nonpayment.
However, the homeowners who have an underwater mortgage and have faced the loss of their home through foreclosure because of their inability to make their monthly mortgage payment are those who may be able to work with their mortgage servicer towards a short sale. Some servicers may require homeowner to apply for a home loan modification, while others may work to offer alternative options on an underwater home loan, but there are indications that homeowners who are struggling with their mortgage payment have found short sell opportunities to be more welcome by services than homeowners who simply want to be rid of their underwater mortgage.
While homeowners who are struggling to make their mortgage payment are not guaranteed to be granted a short sale, there are some refinancing plans which may be available for particular homeowners, and extension programs from the Making Home Affordable initiative could also lessen the burden that underwater homeowners are feeling if a mortgage servicer is unwilling to grant a short sale.