Can you be "underwater" and be lucky?

I'm not sure just what to make of that bedroom..... anyway, that's not the kind of underwater I was really referring to, which is:
Is it possible to owe more on your home than it’s worth and be considered “LUCKY”?

Well, maybe… if you qualify for a new US government “principal forgiveness” program run by the Federal Housing Finance Agency, you may be able to request to have some of your mortgage debt forgiven so you can get your mortgage modified and remain in your homes.  Best I can tell the program has a somewhat narrow set of requirements, but they estimate that over 33,000 homeowners could be included.  

I couldn’t find a lot of detail on what it’s about or how much could actually be forgiven, but here are the eligibility criteria:
  • You must be an owner-occupant of a home whose mortgage is owned or guaranteed by Freddie Mac or Fannie Mae.
  • You had to have been at least 90 days past due on your mortgage payments on March 1.
  • As of March 1, you can't have owed more than $250,000.
  • You have to owe more than 115% of what the house is currently worth. So let's say your house is now worth $100,000, regardless of what you paid for it when you bought it during the housing boom. To be eligible, you have to owe at least $115,000 on that house that's now worth 100 grand.
A possible “fly in the ointment” I see:
“Loan servicers are required to identify which of their borrowers might be eligible, and notify them by Oct. 15. If you accept a "streamlined modification" before then, you may later convert from principal forbearance to principal forgiveness if you are eligible.”

That sounds like an unlikely scenario, placing responsibility on lenders that they seem to have little incentive to accept. 

Anyway, it’s worth looking into if you believe your home is underwater… unintentionally.  You’ll need to contact your lender and it will probably take some perseverance to get through it, but it could be what you need to be able to keep your home.

If this program could help anyone you know -- friends, family, neighbors – who may not be aware of this option, please pass this info on.


Please visit my website for a wealth of information and how-tos about buying and selling real estate, Houston area communities and neighborhoods, financing, mortgage resources and more. 

Jim Pedicord RE MAX  Top Realty

281-610-7847 Cell
713-558-2537 Direct
713-773-3700 x 2537 Office  
713-773-3311 Fax
2911 S. Sam Houston Pkwy. E.   Houston, TX 77047


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