Many homeowners have had troubles with negative equity in their property over the past months and as a result have been paying on a mortgage which may be more expensive than the value of their home. Understandably, homeowners who owe more on an underwater mortgage than their home is actually worth are frustrated but there have been mortgage refinancing plans available for homeowners in this type of situation.
Yet, problems have arisen even in these areas as some homeowners who are facing a negative equity situation are unable to take advantage of these underwater mortgage refinancing opportunities. While finding a more affordable monthly mortgage payment has been the goal for some homeowners, others who may be able to afford their monthly payment despite being underwater have been seeking to lower the overall costs on their home loan through plans like principal reductions.
However, programs like the Home Affordable Refinance Program have been implemented as a way to allow homeowners with Fannie Mae and Freddie Mac to refinance their home loan, as part of the Making Home Affordable Program. Homeowners who have attempted to lower their mortgage payment through this plan have had some success, but many homeowners have stated that finding solutions to their underwater home loan, even when these programs are available, has been difficult.
As an example, some homeowners may qualify for the FHA short refinance program, which allows homeowners who are current on their underwater mortgage to refinance into an FHA home loan that can bring about a lower monthly payment in certain cases. However, some homeowners may only be able to use this underwater refinancing option if their servicer agrees to reduce their principal, which has not been a requirement that has easily been met by some.
Certain homeowners who may be able to find a lower monthly payment on their home loan, through programs like home loan modifications, may be able to afford their underwater payment but are still facing a situation where they may never recoup the losses they have sustained in their property value. While there have been some mortgage servicers who have offered principal reductions, many homeowners have been unsuccessful in this area and have taken drastic measures, like strategic defaulting.
It’s understandable that not all of these underwater mortgage refinancing solutions may be available for every homeowner’s situation, but homeowners do have opportunities through either HARP or the FHA short refinance program which may offer solutions to negative equity problems. Yet, homeowners have also been prompted to contact their state housing agency to see if an underwater mortgage assistance plan from the Hardest Hit Fund may be available in their area and for their particular underwater situation.