The Home Affordable Refinance Program has reportedly seen more opportunities for homeowners when it comes to refinancing through this underwater mortgage assistance program, which was originally set in place as part of the Making Home Affordable Program’s foreclosure prevention effort to assist homeowners in a negative equity situation. Predicaments where homeowners owe more on their home than their home is actually worth have become quite common over the past years as the economic downturn led to a great deal of trouble in the housing market and there are many homes simply sitting empty with too few buyers in the market to combat this backlog of properties.
A report from the Federal Housing Finance Agency stated that refinancing in the Home Affordable Refinance Program increased 30% in the final quarter of 2010, which is a positive report for homeowners who may be struggling in an underwater mortgage situation. Programs to address negative equity have been implemented through HAMP and state initiatives, which are hoped to offer more principal reductions or at least some form of relief for homeowners who are in a position where negative equity has become a strain and has either left many facing the loss of their home through foreclosure or considering the possibility of walking away.
While there are some indications that programs like the FHA’s short refinance plan may help homeowners refinance into a more affordable mortgage after receiving a principal reduction when negative equity is an issue but a homeowner is current on their mortgage, there are proposals to end the Short Refinance Program despite it only having been set in place in September of 2010. Also on the chopping block are federal modification programs which are deemed to be unhelpful to homeowners and, essentially, a drain on funds that could either be better spent elsewhere or used for more successful and helpful foreclosure prevention plans.
Yet, homeowners in a negative equity situation are still seeking out forms of assistance through the Home Affordable Refinance Program and other initiatives as, obviously, many feel that drops in housing prices are due to either inflated property values from years ago or simply as a problem associated with the housing market collapse and many homes sitting empty thanks to unemployment, foreclosures, and a lack of new homebuyers.
Obviously, underwater mortgage refinancing has been a debatable issue for many, but there are still these options available as HARP is continues to be available to homeowners whose mortgage is owned or guaranteed by Fannie Mae or Freddie Mac. While, again, homeowners may find help through the Hardest Hit Fund, the Short Refinance Program or the Home Affordable Refinance Program, negative equity remains an issue that many feel must be addressed, especially if unemployment and slow economic growth may lead to more foreclosures in 2011 and continued trouble in the housing market. There are some who have a more positive outlook on housing for the remainder of the year, homeowners in an underwater mortgage may still talk with their servicer or housing counselors about these underwater refinancing and assistance initiatives that are currently in place and whether they can be helpful for their personal situation.