Homeowner assistance for underwater mortgage situations, from refinancing options or modifications, which have brought lower payments are still available to help homeowners in a negative equity situation, but there are concerns that homeowners may need more plans to help with this devaluation problem in 2011 as there are predictions that recovery in home prices could take years. While the severity of negative equity differs across the nation, there are some locations which have had a great deal of difficulty in this area, and as a result have seen homeowners who have been unable to meet their mortgage payment as a result of negative equity or who have grown frustrated and simply walked away from their home loan.
While traditional modifications have helped some homeowners find a lower monthly mortgage payment on their underwater home loan, there are also refinancing options from the Home Affordable Refinance Program, which has helped some find affordability as well when negative equity has been causing a problem. However, it was hoped that a new program from the FHA would allow current homeowners who are underwater on their mortgage to refinance for a lower rate as options for these individuals may be limited.
Many homeowners have asked for principal reductions when they were current on their home loan but in a severe negative equity situation, yet there have been some financial institutions who are hesitant to offer principal forgiveness. It is true that some banks do allow homeowners to participate in an earned principle forgiveness plan, meaning that if a homeowner continues making their payments their principle will reduce overtime to a principal value that is more level with their current market value, but these options are not always easily acquired or offered from every servicer.
While finding affordable opportunities for underwater mortgage payments may be available for homeowners who are facing financial hardships, concerns have arisen in areas where these predictions of long-term recovery in home values are present. Some areas, like Las Vegas for example, have seen a great deal of trouble in their housing market and some analysts feel that housing prices will not return to original levels for a number of years.
It’s understandable that homeowners who are in the areas where home prices have dropped and have seen little improvement are frustrated with their situation, even if they are able to make their mortgage payment. While opportunities from the FHA short refinance program offered principal forgiveness and refinancing plans for homeowners in a situation where negative equity was present but these homeowners were current on their mortgage payment, this program has had little success due to the lack of participation on the part of servicers.
There are homeowners who are hoping for more principal reduction options to address underwater mortgage needs, but many financial institutions seem to be more geared towards helping underwater homeowners find affordability in their mortgage rather than offering them a principal forgiveness opportunity. While, again, there are some principal forgiveness programs in place, homeowners who are struggling to make their mortgage payment do have options remaining from the Making Home Affordable Program and servicer-direct assistance plans.