Negative equity is a continuing problem that homeowners face but there are some recent reports which have indicated officials are hoping banks will offer more opportunities for homeowners to take part in principle reductions when prolonged levels of underwater difficulties are present, but there are some predictions that may have a favorable outlook on certain areas of the housing market which could impact the availability of certain assistance plans on homes with negative equity. Understandably, there is no certainty when it comes to the housing market, so homeowners may not be guaranteed that these assistance plans will be offered nor is there any certainty when it comes to the future home prices in certain areas.
While there have been some major banks that predict home prices may fall further as we continue on in 2011, there are also some indications that previously hard-hit areas in the housing industry may see an increase in home values sometime this year. There are still factors like unemployment and the number of foreclosed homes that are still sitting empty in a particular area that may impact housing prices, but in instances where homeowners are still facing negative equity, there are some plans which have been in place for quite some time, but also, new announcements from governmental officials hope to spur more principal reductions in cases where homeowners may have a long wait before any equity returns.
Some plans that had promise, like the FHA’s short refinance program, have pretty much failed due to the lack of participation by some banks, but there are still principal reduction options that may be available directly from a homeowner’s servicer, as part of modification program, or the Principal Reduction Alternative plan has been one route that was taken and helped homeowners to reduce what they owe on their loan principal.
Obviously, there have been some hesitation by certain lenders to offer principal reductions to a wide number of homeowners, but as there are still negative outlooks for housing prices in some areas it’s hoped that if more banks will begin to explore the option of reducing homeowners principle it could help reduce some of the financial strain that homeowners have faced as a result of being in an underwater mortgage, but there are also strategic defaults that may be avoided when homeowners are offered forgiveness on their home loan principle in certain cases.
It’s hoped that more banks will begin to offer mortgage principles if continued declines in home prices are seen, but homeowners do need to understand that their ability to qualify for or even receive principal reduction assistance will be affected by not only their mortgage situation but also through their mortgage servicer is as well.