A recent topic that has been ongoing here in September centers around underwater mortgage refinancing programs that may potentially help homeowners find more affordable payments and long-term stability on their home loan payments but are currently not open to all homeowners who may be struggling with negative equity. Specifically, the Home Affordable Refinance Program has been able to help some homeowners refinance but there are arguments by homeowners that the qualifications are limiting the number of individuals that may be helped.
Obviously, there have been talks of changes that may come in this area of negative equity refinancing, but some homeowners also feel that simple adjustments to the qualification criteria of these programs, specifically HARP may help homeowners in need, but there is of course opposition to the idea that simple adjustments would help a greater number of homeowners with their negative equity problems. As an example, eligibility guidelines that are set forth from the Making Home Affordable Program state that homeowners must have their mortgage owned or guaranteed by Fannie Mae or Freddie Mac, cannot be more than 30 days late on their payment, and their mortgage must not exceed 125% of the current market value.
Some feel that these qualifications may limit homeowners as there are many men and women who have seen a decrease in their property value to a point where they cannot qualify for this program because of the severity of their negative equity situation as some have seen drops in their home equity that exceed the 125% cutoff, but there are also some homeowners who are facing underwater mortgage difficulties who may not meet the requirements that their mortgage is guaranteed by Fannie Mae or Freddie Mac.
Also, there are problems that homeowners see when it comes to working with their mortgage servicer as the Making Home Affordable Program has pointed out that these qualifications are merely for guidance and there are potential ways that some servicers could directly help homeowners, yet there is no universal plan that will help homeowners with a variety of servicers despite the fact that they may have similar negative equity problems. As an example, there are some banks who are offering homeowners principal reductions when it may benefit a homeowner’s long-term affordability on their mortgage payments, but in some cases servicers are unwilling to offer principal reductions if a homeowner can make their mortgage payments successfully, no matter how much of a hindrance it may be.
Understandably, this situation grows more complicated as homeowners become frustrated when they see mortgage rates drop further and into record low territory, as there are some men and women who would simply like the opportunity to refinance their home but due to owing more on their home then it’s actually worth, this route may not be available. While there has been speculation that new programs may be imposed or changes may come in existing programs, homeowners still hope that these new incentives to address negative equity will address a broader number of homeowners who are facing a situation where they cannot get a more affordable rate or payment on their home loan simply because the property value in their area has dropped substantially over the past months.