Underwater Refinancing From Fannie Mae And Freddie Mac Through HARP And FHA–Options For Homeowners With Negative Equity

Underwater assistance that has been sought out by various homeowners has usually come in the form of either refinancing options or at least mortgage payment reduction tools that can be used to help homeowners pursue foreclosure prevention when negative equity has been problematic. Some of the more well-known options are those from the Fannie Mae and Freddie Mac like the Home Affordable Refinance Program, but there are options from the FHA which may also be beneficial if more servicers are able to implement these plans to meet the needs of homeowners seeking to refinance an underwater mortgage.

Yet, there are problems which are still being seen here in the month of June, as certain aspects of these programs are not benefiting homeowners in a way that many thought would have been possible. When it comes to federal programs like the federal modification initiative, as well as, these underwater refinancing plans, many individuals and officials feel that more people could have been helped if these programs were utilized on a wider scale or in a more proper manner.

As an example, the FHA short refinance program, which was set in place late last year, is one of these areas where some governmental officials felt cuts needed to be made, as there are very few results being seen in this area, in terms of the number of homeowners who may potentially benefit from this form of aid. Some financial institutions simply do not want to work within the confines of the FHA short refinance initiative, simply because it requires a mortgage servicer to forgive a substantial amount of a homeowner’s principle and then allow them to refinance for an FHA home loan.

More problems that have been seen according to reports here in the later parts of June have also surrounded the fact that there are fewer homeowners seeing success or being offered assistance through the Home Affordable Refinance Program, as reports from the month of April show there was a decrease in the number of assistance plans made available through HARP than there were in the month of March.

Homeowners need to understand though that this does not mean these underwater refinancing options are not available, but where some homeowners are getting bogged down simply comes down to whether their particular mortgage servicer is participating in these programs, if the homeowner qualifies, and what availability there happens to be in terms of their negative equity situation. Some homeowners may have a more severe underwater mortgage than others, so this will necessitate specific attention to the individual rather than applying generalized rules for mortgage assistance but homeowners may still consult with their bank or free housing counselors as to what options they have when it comes to dealing with their underwater mortgage through either these refinancing programs or state-specific underwater mortgage plans.