Underwater Mortgage Refinancing And Principal Forgiveness Programs For Negative Equity Debt Relief

Underwater mortgage debt relief has been a need for many homeowners where negative equity has caused difficulty in their life and has prevented certain refinancing opportunities from being made available. Many homeowners who have been in need of a more affordable mortgage payment have typically been able to refinance their home loan, as interest rates have been low over the past months, and as a result many have seen a reduction in their monthly mortgage payment.

However, traditional refinancing options have not been available for underwater homeowners as, obviously, situations where negative equity is present or problematic and do not offer the same routes to affordability. Yet, offers for homeowners to find more affordable options with their underwater mortgage have come from a variety of sources, but many feel that these underwater mortgage refinancing and debt relief options are simply unhelpful and are not being used in a way that is beneficial to more individuals who are facing a negative equity situation.

Sadly, reports which recently indicated that underwater mortgages had dropped from the previous quarter, but this is due to foreclosures which have been experienced by underwater homeowners. There are some individuals who have faced the problem of negative equity and as a result of their mortgage and inability to refinance, the affordability in their home was no longer present due to other financial factors and foreclosure quickly followed.

Yet, plans like the Home Affordable Refinance Program and the FHA’s short refinance program were offered as a way for homeowners with negative equity to find a solution to their mortgage difficulties. However, homeowners who may qualify for HARP typically had to have their mortgage owned or guaranteed by Fannie Mae and Freddie Mac while the FHA short refinance program has seen lackluster success since this program is open to homeowners who are current on their underwater mortgage and whose servicer will agree to a principle reduction.

Obviously, many homeowners with negative have asked for principal reductions, and some have qualified through home loan modifications, where a reduction in principle may be offered if a homeowner continues to make payments within their assistance program. Yet, the problem with housing and unemployment remains and there are underwater homes which face foreclosure as it seems few options may be available for these particular homeowners.

Again, some homeowners have been granted principal reductions, interest rate reductions, or even term extensions as a way to combat underwater problems with their mortgage or simple financial difficulties which have prevented homeowners from meeting their monthly mortgage payment obligation, but as home prices remain low, and could drop further, calls for more underwater mortgage assistance plans have come from numerous homeowners over the past months. While options may presently be limited, homeowners are still looking to qualified housing counselors and their mortgage servicer for assistance through either of these underwater refinancing plans or alternative forms of foreclosure prevention.