Short Sales On Underwater Homes–Homeowners With Negative Equity And Options To Escape An Underwater Mortgage

Homeowners who are in an underwater mortgage situation may have various opportunities which can be used to deal with their situation in a way that either will allow them to find affordability in their underwater mortgage payment or escape from an underwater mortgage obligation, if certain conditions are met. Many homeowners have been seeking out short sale opportunities as a way to afford foreclosure when they are no longer able to remain in their home due to financial distress.

Obviously, many of the major financial institutions who offer homeowners in a negative equity situation the opportunity to short sell their home will have requirements that must be met before a short sale can be processed. However, short sales are offered by many banks and through such programs as the Home Affordable Foreclosure Alternatives Program, which is an extension of the Making Home Affordable initiative.

Essentially, homeowners who have suddenly come upon a hardship in their life related to job loss or other financial strains and are in a negative equity situation may have options which will allow them to short sell their home and escape the difficulties and trials which are related to an underwater mortgage and owing more on a home than a home is worth. Yet, short sales are no guarantee since over the past months homeowners who have had financial distress related to unemployment or other personal financial factors may have had to seek out other forms foreclosure prevention before their servicer allowed short sale.

While, again, many mortgage servicers do offer short sell options either directly to homeowners or as part of the federal home loan assistance program, many homeowners who are in an underwater mortgage may have to seek out assistance from a home loan modification program or other foreclosure prevention effort before a short sellers granted. Understandably, financial institutions may be hesitant in some cases to offer short sales as they may have to take a loss on a home, but many homeowners have argued to the contrary and feel that more short sale opportunities should be made available.

There have been some analysts who feel that foreclosures may cost banks more in 2011, which could increase the options for homeowners to short sell their home, but again, many servicers would rather a homeowner stay in their home and find an affordable solution to their monthly payment dilemma then go through a short sale process. Yet, homeowners do have these options when it comes to dealing with negative equity and for homeowners who have unsuccessfully attempted to modify their home loan, refinance, or find another form of assistance which will lower their monthly mortgage payment and help them avoid defaulting when financial troubles have arisen may qualify for a short sale on their home provided their servicer approves and a homebuyer can be found.