Homeowners in some areas are still seeing declines in equity despite the fact that mixed results are also being tracked in some cities, as home values have picked up slightly in certain metropolitan areas, but there have been reports released here at the end of September that also point out that prices have declined since last year, leaving many homeowners still in a position where negative equity is a problem. However, despite the fact that there are also predictions that declines may continue into 2011 and potentially early 2012, current opportunities to help negative equity homeowners have not been enough in the opinion of some and there are questions as to how potential help that may be on the horizon could offer solutions.
Obviously, when it comes to addressing negative equity and continued devaluation, the ideal situation that could help correct the problems that many homeowners face would be further economic recovery to the point where foreclosures would drop and home purchases would increase, which would absorb the inventory that is in the housing market. Many banks are finding themselves distressed because they have numerous homes that are simply sitting empty and not enough homebuyers are currently looking to purchase and fill these properties.
While homeowners are well aware of programs like the Home Affordable Refinance the initiative, others are still questioning whether opportunities like the FHA short refinance plan is still an option as this particular proposal offered not only the ability of a homeowner in a negative equity situation to get a lower rate after refinancing but also allowed them to take advantage of principal reductions as well. However, the FHA option never truly got off the ground and since this is one less route available, there is still need for further assistance. Also, it has been heavily reported on that principal reduction plans are available, but in many cases this will be at a servicer’s discretion and there are no universal solutions that are necessarily available.
Furthermore, some homeowners are simply not able to qualify for underwater assistance plans thanks to certain guidelines that are set in place within programs like HAMP but it’s hoped that changes or the introduction of a new underwater homeowner assistance initiative may arise in the future to address these problems. Yet, the homeowners maybe in a position where they don’t have time to wait and see what new proposals may become available in the coming months but want to address their issues currently.
Sadly, some homeowners may be in a position where opportunities are limited when it comes to finding assistance on their underwater mortgage but advisers are still counseling homeowners to speak with their servicer or housing counseling agencies to see what options are available to address their particular situation. Some banks may be able to offer homeowners more affordable payments but other situations have arisen where homeowners can easily pay their mortgage but are more focused on getting a principal reduction.
In some cases, homeowners may have a servicer who is offering principal reductions or a state housing agency implementing programs that may bring mortgage principal assistance opportunities as well, but it comes down to a homeowner simply working with their servicer, keeping in contact with representatives, and exploring any options that may be available to address the needs of homeowners looking for a percentage of their principal to be forgiven.
Since questions continue to arise in this area, homeowners need to remember that they are not guaranteed a principal reduction option, as some servicers may use this plan more than others, but homeowners may still speak with their bank regarding federal programs like the Home Affordable Refinance Program or the Principal Reduction Alternative plan that may bring opportunities to address negative equity for certain individuals.