Bank of America assistance plans through home loan modification efforts have been able to not only lower mortgage payments for homeowners who are struggling to make mortgage payments due to factors like unemployment, but modifications have been used to assist some homeowners who are underwater in their home loan and are struggling with mortgage payments as a result. Obviously, lowering mortgage payments have been a key issue for many mortgage servicers over the past months as modification efforts from both proprietary plans and the federal Making Home Affordable Program have been sought out by numerous homeowners who fear they may face foreclosure.
Yet, there are some concerns that underwater homes will be need to addressed more heavily in the new year as property values are predicted to decrease more before they began to improve. There have been reports which state that some advisers feel that home prices may drop another 20% before they begin to rebound, and this could cause more homeowners to consider defaulting on their underwater mortgage if solutions are presented.
While homeowners with Bank of America and other financial institutions who participate in the federal Making Home Affordable Program may be offered a small principal reduction through permanent home loan modification plans, servicers like Bank of America have also given some homeowners the option to participate in an earned principal forgiveness plan, which allows homeowners to see a drop in their mortgage principal to a level that is closer to a home’s market value.
However, there are still issues which homeowners face, like unemployment, that need to be addressed as well, as there are some complaints about the federal modification program at having slowed in the number of modification conversions to a permanent status. Yet, servicers like Bank of America do still offer federal home loan modification and proprietary home loan modifications as well, which have been beneficial for homeowners over the past months. Despite the fact that federal modifications have begun to slow, there are still options from extension programs and in-house plans, which are said to be outpacing federal modification programs, which may help homeowners find lower monthly mortgage payments and affordability of their home.
Homeowners who are strictly looking for a principal reduction on their underwater mortgage may not have many options as, again, many servicers feel that providing a principal reduction is not beneficial to bringing affordability to a homeowner in need. Yet, fears over strategic defaults in the coming months have many who feel that more options for underwater homeowners need to be presented so that homeowners can not only find affordable monthly mortgage payments but will be able to see the principle which they owe on their home to be more in line with its current market value.