Recent reports have indicated that some officials and members of the Obama administration are looking at ways to help homeowners who are in a negative equity situation due to the fact that many homeowners are seeing property value decreases still in many areas across the nation, which has led to predicaments in which homeowners may be in a position where these individuals are struggling to make their mortgage payment or some homeowners may be unable to take advantage of rates that are currently available on home loans, which could save them money even if they are current on their payments. We have seen these two different categories of homeowners arise in these negative equity situations, and it’s obvious that some plan that are currently in place to address the needs of these types of homeowners may not have been as helpful to as many as it possibly could have.
However, reported discussions over new refinancing plans that may arise are still in the very early stages, as there are some officials who speculate that a new program they be offered or changes to current programs like the Home Affordable Refinance Program may lift certain restrictions that could have hindered homeowners from taking advantage of this refinancing opportunity in the past. Obviously, problems like investors, lender participation, and the severity of a homeowner’s negative equity situation have all played into the success of underwater refinancing programs, as an initiative that was set forth by the FHA basically never got off the ground due to the fact that there was such a low level of participation on the part of many banks.
While homeowners do still have options like modifications, and for those who qualify, the Home Affordable Refinance Program may still help in a capacity that can aid certain individuals who are facing negative equity and payment problems, but some homeowners are seeing such decreases in their property that they fall outside of the guidelines that may be set in place for some of these refinancing opportunities. However, there are state programs like those from the Hardest Hit Fund that may offer principal reduction plans or other negative equity solutions for some, but a failure to see improvement in the housing market and the job market have created a great deal of strain on the economy, as some homeowners are finding they cannot pay their mortgage, others are growing frustrated when they owe so much more on their home than it’s actually worth, and there are of course foreclosed homes that are simply sitting empty and could take years to be filled.
Homeowners are currently able to speak with their servicer or housing counselors to explore options to make their underwater mortgage payment more affordable, but it’s hoped that since low mortgage rates are still in place, talks about new underwater refinancing programs or changes to current programs will progress at a faster rate and more solutions may be provided in the near future. If homeowners can find assistance in their underwater home loan predicament through refinancing options and more affordability, it’s hoped that this will stabilize the situation of certain homeowners to a point where foreclosures as a result of unaffordable payments coupled with the inability to refinance due to negative equity will be less of a problem in the housing market.