There have been mixed reports and various accounts of federal underwater mortgage assistance plans that are still being offered through the Making Home Affordable Program as some homeowners have indicated they have found underwater mortgage relief through these plans, while others state that many negative equity assistance programs have become either unhelpful or are simply not offered. Decreases in property values have caused many homeowners financial distress, especially where mortgages like adjustable-rate home loans have been in place, but also for homeowners who view their home as an investment, substantial drops have left many wondering why they are even continuing to make their mortgage payments.
Yet, according to the Making Home Affordable website, programs like the Home Affordable Refinance Program, which is set to expire in 2011, the FHA refinance program and even principal reduction plans through the Principal Production Alternative program have been offered to homeowners in distress when negative equity is the cause. However, one example of these mixed reports that have been seen comes in the area of the FHA’s refinance program. The FHA short refinance plan initially was set to help homeowners by allowing them to refinance for a more affordable mortgage rate into an FHA-backed mortgage after their lender forgave a percentage of their mortgage principal. Many feel that the fact that homeowners who qualify for this plan were only those who were current on their underwater home loan lead to lackluster results as, obviously, banks were unwilling to allow homeowners who could afford their underwater home loan to receive a principal reduction and then refinance with the FHA.
However, homeowners who are struggling with negative equity, in terms of their monthly mortgage payment, may have not only traditional modification options available, but the Refinance Program is still in effect in the early parts of 2011 and, could lead to more affordability for homeowners with a mortgage either owned or guaranteed by Fannie Mae or Freddie Mac. While recent proposals to change the mortgage industry have worried some homeowners who believe that eliminating certain programs or homeowner incentives could create more financial distress, homeowners are currently able to take advantage of not only the federal underwater mortgage assistance plans, but also the Hardest Hit Fund can address underwater home loans as well.
Ultimately, homeowner seeking a principal reduction have found that, outside of the HHF Program, there may be few options as many servicers are unwilling to reduce a homeowner’s principal, but there are still plans in place that can address these issues for homeowners so that an underwater mortgage and difficultly related to a homeowner’s underwater mortgage payment can be resolved and foreclosure prevented.