Citigroup homeowners are a few of the many homeowners who have attempted to find underwater home loan assistance in situations where negative equity is present, as numerous homeowners with a variety of mortgage servicers are seeing their property values decline across the nation. Solutions for home loans which are underwater are available but they may vary, and in some cases have often been difficult for homeowners to obtain. When it comes to principal reductions, there have been some servicers who were hesitant to offer these forms of assistance.
Yet, there have been options for some homeowners when it comes to finding affordability in their underwater mortgage and servicers like Citigroup, among others, who participate in the Making Home Affordable Program may offer principal forgiveness options as part of permanent home loan modification plans. Typically, homeowners in an underwater situation are either looking for a more affordable monthly mortgage payment or, for those who view their home as an investment, want their mortgage principle reduced to an amount that is closer to their current market value.
For homeowners with Citigroup and other mortgage servicers in the Making Home Affordable Program, guidelines for permanent home loan modifications state that homeowners who make timely payments within a permanent home loan modification may receive up to $5000 in principal forgiveness over a period of five years. While some homeowners may view this as beneficial to their underwater situation, others feel that a more substantial reduction in their mortgage principal is necessary.
There are, however, some opportunities for homeowners to refinance their underwater mortgage through the Home Affordable Refinance Program. Homeowners who are able to take advantage of this refinancing opportunity typically have to have their mortgage either owned or guaranteed by Fannie Mae or Freddie Mac, but this may offer opportunities for a wide number of homeowners who are in a negative equity situation.
Yet, there are many who feel that principal reduction options of a sizable amount may not be available for many homeowners as there are numerous mortgage servicers who feel that mortgage principal forgiveness is not beneficial when it comes to offering affordability on home loans. Many servicers, like Citigroup, have used term extensions and interest rate reductions to modify mortgages for homeowners who face foreclosure, but when it comes to forgiving principle amounts, this simply does not lower a homeowner’s monthly obligation in many cases and, as a result has not been widely used. Granted, there are some earned principal forgiveness programs offered by banks which will reduce a homeowner’s principle as long as they continue to make payments on their mortgage, but again, this is not something which has been widely practiced.
Advisers have prompted underwater homeowners who are facing trouble related to their mortgage payments to either contact their mortgage servicer directly or seek assistance from an approved housing counselor. Home loan modifications and other affordability options are still in place for homeowners with negative equity, but when it comes to receiving a principal reduction, homeowners may find this road to be more difficult, but this could be dependent upon their situation and mortgage servicer.