Home Affordable Refinance Programs Expiration In 2011–Is Further Negative Equity Refinancing Assistance Needed?

Homeowners in a negative equity situation who have hoped that the Home Affordable Refinance Program can provide solutions to their predicament have found that this refinancing option is one of the few plans that may be offered for those who are in a negative equity situation, but the program is set to expire in June of 2011, according to the Making Home Affordable website, which has many asking whether further negative equity refinancing assistance plans will be needed. Obviously, many homeowners are in a situation where severe negative equity is present and there are mixed feelings on whether homeowners should be able to refinance their mortgage, receive a principal forgiveness plan, or sell their home at a loss and be forgiven of the remaining debt.

While homeowners who have been able to use the Home Affordable Refinance Program may have found more affordability in their monthly mortgage payment, there are servicers who simply use traditional modifications to lowering homeowners monthly payment but still require that they meet payments on a mortgage that is worth more than their property value. Understandably, this is a very frustrating situation for many homeowners and, there have even been cases where homeowners have simply done a great deal of damage to their credit score by simply walking away from their home.

Yet, short sales and deed in lieu of foreclosure plans have been offered as a way to prevent strategic defaults in cases where homeowners have faced particularly difficult economic hardships, but there are still concerns that some homeowners may simply not qualify for underwater assistance. While, again, the Home Affordable Refinance Program is still available, there are some financial institutions that are shutting down HARP offices in preparation for the conclusion of the program but there are homeowners who still feel solutions need to be available in the latter part of 2011.

There are some indications that home prices may drop further or simply take years to return to old values in certain areas, if they ever return at all, and for homeowners who may be in a situation where assistance could be used, there is concern over what opportunities will be available. Obviously, the FHA short refinance program had relatively no success as many servicers were unwilling to participate in a plan that required them to reduce a homeowner’s principles so that they could refinance to a more affordable mortgage.

Also, there is the problem with homeowners who can make their monthly mortgage payment but owe a substantial amount more on their home than their home is worth. While there are those who feel homeowners in this situation must simply continue paying their mortgage obligation due to the fact that when homeowners purchase a home there is no guarantee that the value will increase, underwater homeowners in severe situations feel that housing prices were inflated and in certain cases these home loan principles should be lowered to the market’s current value.

While there is still time for additional solutions to underwater home loans to be presented, 2011 may mark the final opportunity homeowners have to participate in the Home Affordable Refinance Program which, again, is an extension of the federal Making Home Affordable Program and has aided some homeowners in finding affordability in their underwater mortgage.