Underwater?? – Discussions On Refinancing Programs That Lower Homeowner Mortgage Costs

By Steven Craig

There has been some talks over the past few weeks that homeowners may see either new proposals or changes in current underwater home loan assistance programs as rates on mortgages are quite low at present time, but this is obviously unhelpful to homeowners in negative equity position simply because traditional refinancing options may not be in place or available for their specific situation. However, there has been talk that programs like the Home Affordable Refinance initiative will be reviewed and potentially offer more homeowners the option to qualify for assistance from this particular plan or similar programs that would allow homeowner mortgage costs to be lowered despite the fact that negative equity is in place.

Recent speculation has arisen regarding changes in requirements within HARP could be on the rise and, as homeowners are continuing to see issues like property devaluation despite the fact that the program has a cutoff date in terms of mortgages that were originated before June 2009 and requirements that homeowners must have a mortgage on our guaranteed by Fannie Mae and Freddie Mac. While these requirements have helped some homeowners, it seems that with continued trouble in the housing market and predictions that homeowners may see further problems in the future, in the area of equity value decreases, there are some proposals that have been made to allow homeowners to take advantage of either current programs or there has been a call for new opportunities to be made available.

Obviously, homeowners may be in a position where they can’t meet their mortgage payment and, in some cases, opportunities like mortgage payments or state-specific plans may address homeowner issues in this particular area of negative equity problems, but what some homeowners have grown frustrated with is the inability to take advantage of mortgage rates which are currently between 4% and 5%, for homeowners in the best positions financially. Yet, even homeowners who may not qualify for the lowest of these rates are still seeing situations arise where if they did refinance they may see a drastic reduction in their interest rate on their home loan, which obviously would equate to more affordability in most cases.

It’s because of this inability to refinance because of negative equity that some homeowners have simply walked away from their mortgage payment obligation, which not only poses a great deal of trouble for banks but can do substantial damage to a homeowner’s credit score. There have been some programs like short sales offered to individuals who may be willing to sell their home at a loss, but some servicers have been unwilling to work with homeowners who can make the mortgage payment but are simply unhappy with their negative equity problem.

While the issue of underwater home loans may not have been as severe in the past, it’s clear that as bad as things may have gotten, there are few officials who feel housing prices will return by any drastic measure in the future, so homeowners are still stuck with negative equity problems that in some cases have no solutions. There has been no official word on what, if any, changes may come in the area of underwater refinancing, but many officials are arguing that with the present problems and a somewhat negative outlook, either changes or new programs must be introduced into the housing market to help underwater homeowners with affordability opportunities that may come from simple refinancing options.

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