In some areas of the housing market prices are still down when compared to last year, which has led to a situation where homeowners are continually looking for underwater mortgage assistance, but there are some options that have been unhelpful to homeowners when it comes to providing both affordability on their mortgage payment and principal reduction options, which is something that many homeowners have been requesting when severe devaluation is in place. Obviously, some homeowners may be in a position to take advantage of options like the Home Affordable Refinance Program, but there are still issues which have arisen related to other initiatives that have yet to get off the ground and running, and by and large may never be an option that homeowners may pursue.
While programs like the FHA’s short refinance initiative may have been able to offer homeowners a principal reduction in refinancing options, this plan really had no steam from the beginning and is not a major path that homeowners can use to their advantage at the current time. However, homeowners who are in negative equity situation may want to start their search for debt relief and underwater assistance by simply talking with their mortgage servicer as many banks may have different policies on how they will offer aid to these homeowners, but when it comes to options like principle forgiveness or underwater refinancing opportunities, it will depend on the homeowner’s situation and their bank as to what opportunities will be available.
There are also some options available from state housing agencies through efforts like the Hardest Hit Fund that may offer principal reduction alternative plans, yet where many homeowners have stumbled in this area when dealing with their mortgage servicer is that there are no requirements to reduce a homeowner’s mortgage principal even if they have seen a major drop in their home value. Homeowners may have a better chance at getting a more affordable mortgage payment through various efforts from these federal and state programs, but what homeowners have been seeking in many cases is a way to bring their mortgage principal much closer to the property value they are currently seeing.
This has raised some issues despite the fact that some officials have been calling on these banks to offer more underwater mortgage assistance plans, as there are arguments from homeowners who may not be in a negative equity situation or whose situation may not be as severe as homeowners who are given forgiveness. Some of these homeowners feel a reduction on the principal of other homeowners means these individuals are essentially getting out of the original agreement they had with their servicer and if their home does increase in value in the future they may stand to profit even more where homeowners who are continuing to make underwater mortgage payments may not be offered such an advantageous plan.
Homeowners who are having trouble making their mortgage payments are being advised to speak with their servicer or housing counselors from HUD or the Making Home Affordable Program so that they will be able to address their foreclosure prevention needs before their situation becomes too problematic to correct. However, as some homeowners are continuing to see, in cases where underwater home loan payments are being made on time, some servicers may reward homeowners who are in this situation by offering a principal forgiveness option, while others may simply have to continue to meet their mortgage payment and hope that their property value will return in the coming years.