Underwater Mortgage Assistance Plans–Homeowners Seek More Affordable Payments And Lower Principals

Underwater mortgage assistance plans have been offered through various institutions and programs, like the FHA’s short refinance plan, and the Making Home Affordable’s Refinance Program, but homeowners are still in positions where they either need assistance with their payments, in order to make their underwater mortgage obligation more affordable, or there are those who feel that a lower principle is in order due to the severity of their underwater predicament. Sadly, there are indications that more homeowners may be seeing negative equity, which has led to frustration for current homeowners and, in some cases, hesitation on the part of new buyers in certain areas.

While a reduction in property value is said to be, by some analysts, good news for these new buyers, there are still areas of the nation that are predicted to see either continued drops in property values, which would obviously dissuade some homeowners from buying in those areas, but there are also some predictions that current reductions in home values may take years to recover. According to a recent article on HuffingtonPost.com, the number of underwater home loans for the fourth quarter of 2010 increased, which is a bit of a setback in terms of home values in certain areas that have been particularly hard hit like Nevada, Arizona, and California.

Decreases in home values have led to strategic default in some cases and, again, frustration on the part of homeowners who may have few options left to help them avoid either financial stress related to owing more on a home than the home is actually worth, or in some cases, there have been few preventative measures that have kept homeowners from walking away. While homeowners with a mortgage that is guaranteed or owned by Fannie Mae and Freddie Mac may be able to take advantage of the Home Affordable Refinance Program, arguments are still being made that the FHA short refinance program could also be more helpful.  Yet, underwater home loans are creating a wide range of difficulties across the nation as homeowners either walk away or seek to short sell their property.

Again, there are some who feel that new buyers may be able to not only lock in low mortgage interest rates that are currently being offered, but with decreases in home values, many new buyers may be able to get an incredibly affordable home that, in recent months or years, may have cost a substantial amount more. Yet, arguments have also made mention of the fact that banks are being more cautious and have required that homeowners put a higher down payment on their mortgage when buying.

While programs like the Hardest Hit Fund have also then implemented in these states where negative equity has been particularly troubling, there are still many who feel that more accessible and clear cut solution to underwater home loans has yet to be presented. Many have called for the termination of the FHA short refinance program, which has been initially unpopular since servicers would have to offer principal forgiveness before a homeowner could refinance into an FHA mortgage, but there are those who feel that underwater refinancing and modifications, while they are available in some cases, simply may not be enough. Yet, homeowners may still qualify for HARP or a modification in cases where they are having trouble meeting their monthly mortgage payment as a result of negative equity, but for homeowners who simply want a principal reduction due to devaluation in their property, some feel these individuals must simply continue paying on their home in the hopes of seeing a return to the home’s original value.