Homeowners have had difficulties related to negative equity over the past months and have sought out assistance opportunities to help them deal with the troubles which have arisen thanks to underwater mortgages. Homeowners have typically been unable to traditionally refinance their home loan when negative equity is in place, but there are options through programs like the Home Affordable Refinance Program, which is an extension plan of the Making Home Affordable Program.
Obviously, homeowners with negative equity are seeking affordability opportunities as many have had difficulty making their payments thanks to an underwater mortgage. While there are various opportunities which may be available through both federal and state underwater assistance plans, many homeowners have simply sought out refinancing opportunities that will allow them to lock in a lower rate on their underwater mortgage and, hopefully, a lower monthly payment as well.
Some cases where negative equity is a problem have been unaided by traditional home loan modification plans, but refinancing programs for underwater homeowners may be available to those who qualify from the Home Affordable Refinance Program or opportunities from sources like the FHA and the Hardest Hit Fund, which has offered assistance to state housing agencies so that they can implement specific assistance programs for various states.
According to the Making Home Affordable requirements for underwater refinancing through HARP, homeowners must own a home that is no greater than a four unit property as their primary residence, have a mortgage owned or guaranteed by Fannie Mae or Freddie Mac, must be current on their mortgage payments, and have a primary mortgage that does not exceed 125% of their home’s current market value.
Obviously, factors like income will weigh into a homeowner’s ability to refinance their underwater mortgages well, as homeowners who may be without income due to unemployment would not benefit from a refinancing plan. It has also been reported that homeowners must be in a position where this type of refinancing will provide a sustainable home loan payment, as some homeowners who may be easily able to make their underwater home loan payment obligation might not qualify for these underwater refinancing plans. Homeowners who are current on their mortgage but face potential problems related to their underwater mortgage may qualify, but again, the ability of a homeowner to take advantage of this Home Affordable Refinance Program may be dependent upon their personal situation.
It needs to be understood that this underwater refinancing opportunity is no guarantee to assist a homeowner when it comes to avoiding foreclosure, but there are some homeowners who have benefited from these refinancing options from Fannie Mae and Freddie Mac. While, again, not all underwater homeowners may qualify for HARP, homeowners have been prompted to speak with their servicer or consult the Making Home Affordable website for more information on underwater refinancing.