There have been reports that state negative equity is still a major problem in our nation, despite the fact that some reports show that the number of homeowners in a position where they owe more on their home than it’s actually worth has decreased from last year, but only by a few percentage points, as there are some indications that almost one-quarter of the homes in our nation are experiencing some form of devaluation. While this could mean is that homeowners are likely to see more help on the horizon when it comes to finding affordability but these strategies that are currently being talked about and current assistance plans in place have not necessarily given much comfort to some officials when it comes to how it may help reduce payments or stop strategic defaults.
Obviously, there are those who feel that changes to existing programs or even new opportunities for homeowners to refinance could do some good but there are more underlying issues that these programs currently do not address and these changes may not do much in certain areas of homeowner concern either. As an example, if there are adjustments made to the requirements that homeowners must meet within programs like the Home Affordable Refinance Program, it could open the door for more homeowners to refinance their home to a much lower rate and, as a result, get more affordable monthly payments.
Yet, there are by no means going to be opportunities available for every homeowner to refinance, and furthermore there are some concerns about homeowners who are able to meet their mortgage payment but are looking for something outside of refinancing to help their situation. As an example, some homeowners want a reduction in their mortgage principle as a way to help them with their negative equity situation, simply because of some can meet their mortgage payment without much trouble or may already have a low rate on their home and would not see much advantage to refinancing at the present time even with historically low rates being offered.
In certain cases, underwater homeowners may refinance for a lower rate but only receive a small reduction from what they currently have and closing costs or fees could offset any savings they see, so some homeowners in a negative equity position already have a mortgage payment that is within their financial means attached to an affordable rate as well. Yet, some of these homeowners are asking for principal reduction simply as a way to alleviate the overall burden they will have to meet as some feel they will have their home paid off before their original home value returns.
Again, changes that may be on the horizon or adjustments to current programs are only to be speculated on this point, as there has been no concrete improvements, new programs, or adjustments that have been announced but homeowners do still have the problem of being in the camp where principal reductions are being called for but potentially unavailable. Each mortgage servicer may have a different way of dealing with homeowners in this position, but what has frustrated some homeowners to the point where they have walked away from their home is the inability to get a principal reduction in the case where their equity has disappeared by a large amount, and in these instances some homeowners feel that simply offering refinancing opportunities may not be enough to address every concern a homeowner has on their underwater home loan.