There are homeowners who are facing negative equity on their mortgage and as a result have been prompting mortgage servicers to make principal reductions more available, and as of late, there are even officials who are hoping that more banks will offer principal forgiveness options due to prolonged negative equity problems and bleak forecasts for certain areas of the housing market for the rest of 2011 or longer. While there are some areas of the nation that have seen increases in home prices and, as a result, some homeowners may be working their way out of the negative equity situation, some men and women are still looking at an underwater mortgage situation that is so severe they feel they may never be able to recoup their losses.
However, this problem of negative equity is made even worse in cases where a second lien is present on a home and, for homeowners who are facing this problem, questions have arisen as to whether there are opportunities to not only potentially modify a second home loan as a way to find more affordability, but there are some indications that homeowners are seeing their second lien extinguished entirely. Yet, it needs to be understood that this particular type of mortgage forgiveness is not easy to come by as some homeowners may simply be in a position where their second mortgage will not be forgiven or even reduced.
The May report from the Home Affordable Modification Program stated that there have been 1,524 second lien modifications that involved a full extinguishment of this particular obligation for homeowners, but there are also some homeowners who are seeing a portion of their second lien forgiven as well. Homeowners need to understand that this is not something that will be available for everyone as there are some banks who may not be participating in this particular opportunity, despite the fact that many major financial institutions are offering second lien modifications.
There are some homeowners who may have to settle for a modified second lien payment, which could potentially offer more affordability, but for those who were hoping that they may get all of or a portion of their second mortgage extinguished, it could be a difficult road or not even an option for some. However, homeowners are still seeing positive results in terms of the number of second lien modifications that are being made, so even if a homeowner is unable to have their second mortgage forgiven or reduced, there are still potential opportunities for affordability that remain and could help homeowners avoid the loss of their home when a second mortgage is in place.