A study by real estate Web site Zillow.com found that 21.9% of U.S. homeowners -- 20.4 million -- owe more on their mortgages than their homes are worth, the Wall Street Journal reported May 6. Such homeowners, called "underwater" in the real estate world, will have trouble refinancing or selling their homes, the article said, which could exacerbate the housing downturn. Stan Humphries, a vice president for Zillow, told the newspaper that home prices have dropped in some markets that hadn't seen trouble last year, putting about four million more homeowners underwater since December.
The Journal pegged this as a "challenge" to the Obama housing rescue plan, Making Home Affordable, which is trying to stabilize the market by giving financial incentives to banks that work with troubled homeowners. Under the plan, certain homeowners who are underwater can refinance -- but only if they are underwater by 5% or less of the home's value. That excludes virtually all homeowners here in Southern California, where housing prices have dropped steeply, leaving some underwater by six figures. Such homeowners can still negotiate a loan modification under the plan, but lenders have been reluctant to risk a loan modification for deeply underwater homeowners, and some borrowers may think it's better just to walk away.
The article says the Obama Administration is looking into raising the limit for the refinance program, so homeowners who are deeper underwater can participate. As Ontario loan modification lawyers, we hope they can manage it. Refinancing is not appropriate for every distressed homeowner, but when it works, it is far better for everyone involved than a foreclosure or even a loan modification. The borrower gets more realistic terms, the lender protects its investment and the local housing market isn't hit with yet another foreclosure. Most of this is also true with a loan modification -- but because of bureaucracy and a perceived threat to profits, lenders have been reluctant to offer realistic loan modifications. Expanding refinancing eligibility would give homeowners another tool to help them stay in their homes.
Based in Anaheim, Howard Law LLP has an active practice negotiating loan modifications for clients throughout California. Our Temecula loan modification attorneys argue aggressively for lowered interest rates, expanded repayment periods and changes to "exotic" and unfair loan structures such as adjustable-rate mortgages. Banks listen to us because we understand your rights -- and they know that, if necessary, we are prepared to sue them to enforce those rights. The goal for our Riverside County loan modification attorneys is always to keep our clients in their homes at a new, lowered, realistic monthly mortgage payment.
If you believe you can save your home with a loan modification, but you know you need help, you should call Howard Law as soon as possible. For a free, confidential consultation, you can contact us online or call us toll-free at 1-800-972-5925.