Plans for underwater homeowners may be able to offer principal reductions and general financial assistance as reports have stated that home prices have continued to decline in many areas and, overall, there have been decreases in the national housing market. Understandably, many homeowners who are in a negative equity situation are either looking for more affordability in their monthly mortgage payment or there are some who feel that they have had such a drastic decrease in their home’s value that only a principal reduction would keep them from simply leaving their mortgage by walking away. However, there have been alternatives to walking away from a home as some homeowners have been able to participate in short sales and deed in lieu of foreclosure programs, and there are also more programs in place set to be more fully implemented in the near future.
Yet, according to the Federal Housing Agency, the monthly house price index declined 0.3% from December to January, but for 12 months ending in January, U.S. prices fell 3.9%. Obviously, the severity of negative equity differs in various areas of the country, as states like California, Nevada, and Florida are just a few that have seen continued difficulties in the housing market. However, homeowners are still being made aware of programs that may be available to help them not only find more affordability in their mortgage payment, but also there are ways which homeowners who are in a particularly difficult situation may be able to simply surrender their home or sell at a loss and be free and clear further obligation.
As mentioned earlier, short sale and deed in lieu of foreclosure programs have been used in cases where homeowners have attempted to find some form of loss mitigation through either a modification program or one of the state-specific plans that may help address negative equity, but were unsuccessful. While more banks are being prompted to help homeowners in situations where a short sale may be an option for the homeowner, there is still the troubles with numerous foreclosures causing a backlog of empty homes in the housing market, so helping fill homes that may face foreclosure through the use of a short sell program can be beneficial in this area as well.
When it comes to finding affordability in a home loan payment, modifications may have helped some, but programs like the Home Affordable Refinance Program and the FHA short refinance program have been in place over the past months in the hopes of bringing more homeowners lower payments when negative equity has caused problems. While there is opposition to various homeowner assistance programs, which have been deemed unsuccessful, plans like the FHA short refinance program have only been in place for a couple of months and, until recently, have not had a wide number of financial institutions to sign on for this particular form of principal reduction and refinancing assistance.
Yet, homeowners in a negative equity situation who may face financial hardships are being prompted to either consult representatives of the Making Home Affordable Program, speak with their servicer, or state housing agency to see whether they may qualify for a principal reduction and other negative equity assistance through the Hardest Hit Fund.