Underwater homeowner assistance options through refinancing programs and principal reduction plans have been made available through the FHA, the Making Home Affordable Program, and the Hardest Hit Fund as a way to provide some form of relief for homeowners who are struggling under the pressures of negative equity and the inability to meet their home loan payment as a result. Yet, there are different options for assistance available to underwater homeowners, however, there are some aspects of these programs that may make one particular resource more helpful for some homeowners than others.
As an example, when it comes to refinancing options, the FHA’s short refinance program was implemented in September of 2010 in the hopes of providing principal reductions and refinancing options for homeowners who may be current on their mortgage payments but are still under the distress that comes with being in a negative equity position. There have been debates over this particular program due to the fact that it is a voluntary on the part of servicers, but would provide homeowners the opportunity to receive a principal reduction from their servicer and refinance into a more affordable FHA-insured home loan. While there have been some banks who committed to this program there is hesitation on the part of some as many feel that homeowners who are able to meet their mortgage payment despite being in an underwater position should not be afforded the opportunity for a principal reduction, which is necessary in the FHA short refinance program.
However, homeowners do still have options available from other plans as initiatives like the Hardest Hit Fund do provide some homeowners in specific states principal reduction options to help them find more affordability. While it will depend on the area a homeowner lives in, as to whether this program has been implemented, homeowners may be offered either funds that will help them meet their mortgage payment when a homeowner is facing an imminent threat of defaulting or there are some servicers in these plans who are offering simple principle reductions in cases where a homeowner has faced a substantial amount of loss on their home’s value.
There are still some homeowners that may be able to take advantage of the Making Home Affordable underwater assistance program, known as the Home Affordable Refinance Program, as homeowners who have a mortgage that is owned or guaranteed by Fannie Mae or Freddie Mac may find options to correct negative equity problems or if financial strains are a concern for a particular homeowner, many of these plans hope to offer more stability in the coming months as many initiatives are set to continue into 2012.
No matter the negative equity situation that a particular homeowner faces, advisors suggest that homeowners need to either speak with an FHA representative, an official from the Making Home Affordable Program, or talk directly with their mortgage servicer to see whether they particularly qualify for these plans. Some banks may be participating in options like the Hardest Hit Fund could offer other mortgage principal reduction assistance or refinancing plans, but again, not all of these opportunities are available for every homeowner’s particular situation as certain guidelines must be met in all of these negative equity assistance programs before a homeowner can take advantage of a certain program.