Officials have differing views on the future of the housing market and home loan values as there are some who feel that home prices will soon begin to rebound, and in some areas of the nation this has already occurred, but overall there are also officials who feel that these problems being seen in terms of negative equity will continue on for quite some time. Yet, no matter under the best of conditions, there are arguments being made that homeowners who are facing negative equity will still have a long time before they see the return of any value that may have been lost, especially in extreme cases where the devaluation on a property was severe.
However, there are indications that government officials are trying to sway more banks to help underwater borrowers by offering principal reductions, which can be helpful in these extreme cases where negative equity is causing a great deal of financial distress. Currently, there are options for principal forgiveness within the federal home loan modification plan and programs like the Principal Reduction Alternative plan has also offered some homeowners the opportunity to have a portion of their principal forgiven in cases of financial distress and severe negative equity.
Obviously, President Obama and other officials are looking to banks in order to make more home loan modifications and foreclosure prevention opportunities available to homeowners, but there is also the issue of principle forgiveness which has been voluntary on the part of many banks over the past months and, according to what servicer a homeowner happens to be with, it could lead to the opportunity of principal forgiveness or nothing at all.
Understandably, banks who are dealing with homeowners in a negative equity situation who may be able to afford their mortgage payment are less likely to offer principal reductions, but there are some major banks who have reportedly helped homeowners through principal reductions, even if it was not to the extent where a homeowner is no longer underwater on their mortgage. While there are many who feel a great deal of improvement could be seen if certain changes were made within the modification effort and when it comes to dealing with negative equity, there are still some banks who are hesitant to offer a wide variety of mortgage principal forgiveness options to homeowners at the current time.