Underwater MortgageTo my mind, there's nothing more central to family finances than the family home. And while houses are starting to sell more briskly in some markets again -- even in places like Phoenix that have struggled mightily since the bubble burst -- about one-quarter of all homeowners with mortgages, nearly 11 million in all, are still underwater on their loans.

The good news is that real help for those homeowners is finally available. The bad news is that the paths to that help are so confusing that many people who need the aid those programs offer are unlikely to take advantage of them.

"It's a matter of which programs are available for which homeowners," says Keith Gumbinger, vice president at HSH.com. "Frankly, I'm not sure how anybody in any kind of difficult straits can figure out where to go, get the eligibility stuff straight and actually get help."

So let's break it down, program by program -- because this new assistance is available in several forms.

• HARP 2.0. The second phase of the government's Home Affordable Refinance Program is designed to cast a wider net, so more homeowners will be able to refinance. The major change: There's no longer a maximum loan-to-value ratio (previously, it was 125%), which means you can be far underwater and still refinance. "But perhaps equally as important is that there is no [requirement for] proof of the amount of income -- just that the income exists -- no appraisal of the property, and the chance for reduced fees if the term is shortened to 20 years or less," says Gumbinger. The program is set to run through December 2013.

• The Mortgage Settlement. This is the deal you've no doubt heard about on the news, between the Justice Department and five of the country's biggest mortgage lenders -- Ally Bank, Bank of America (BAC), Citi (C), JPMorgan Chase (JPM) and Wells Fargo (WFC). The $26 billion those banks will pay will primarily be used to provide a little relief to borrowers who are underwater and behind on their payments. Bank of America recently announced that it will attempt to reduce the principal of its qualified borrowers to current market value, which could mean average reductions of $100,000 or more. If your mortgage is held by one of these banks and you're underwater, contact the lender to see if you qualify. Note that while many mortgage relief programs -- including HARP -- are only available to borrowers who have loans owned or guaranteed by Fannie Mae or Freddie Mac, this settlement deal is the opposite: Your loan must be serviced by one of the five aforementioned banks to be included in the settlement.

• FHA Streamlined Refi. If you have an FHA loan that was endorsed on or before May 31, 2009, (ask your lender if you're not sure) and you've made the last 12 months of payments on time, you may be eligible to refinance for less. Beginning June 11, FHA's Upfront Mortgage Insurance premium will be reduced to 0.01% and the annual fee cut in half, to 0.55%. The move could save FHA borrowers an average of $3,000, according to the Department of Housing and Urban Development.

Now, here's the sad truth: Even if you qualify for and receive some of this assistance, after all is said and done, your home may still be underwater. So Gumbinger and HSH.com have rolled out two new calculators to help you make informed decisions about your options. The first, called KnowEquity When, will tell you when you'll break the surface and owe less on your home than it's worth. The second, KnowEquity How, will tell you what you need to do to get above water again by a specific date.

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Great, really it is a best mortgage blog. Thanks for share this.


September 17 2013 at 6:27 AM Report abuse rate up rate down Reply
Kerry Daniel


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Charles Morgan

September 11 2013 at 1:55 PM Report abuse rate up rate down Reply

Great Article,
The program is able help 99.9% of the people who are underwater and can put the equity back into their property. Nothing like the government programs.

Thanks for share tihs.

April 12 2013 at 10:25 AM Report abuse rate up rate down Reply

Well I fell into hard times, I had a really good job for years got pregnant, had a baby to go back to work for them to let me go so they can down size. Called my mortgage company right away before I fell into to trouble, only for them to tell me well your not behind yet nothing we can do. So called them back a few months later when I was behind only for them to tell me I have no income. Ok so I found another job not making near as much as I was called them again to let them know and see if they will help me now, and they told me my debt to ratio was not there for them to help me. Now this is going on almost 3 years I pay what I can month here and there, and maybe a even a half payment oh yeah that's right they don't except that. So when they Bank of America is supose to help you that's a lie. So now what do I do?

October 02 2012 at 6:42 PM Report abuse rate up rate down Reply
James Young

There is a program that can help you and the others. I think the company is Freedom USA Investing and they help people with underwater mortgages. They are able to put equity back in the property. The website is "refinanceunderwatermortgagehelp" {dot} com.

The program is able help 99.9% of the people who are underwater and can put the equity back into their property. Nothing like the government programs. Which they have you jump through a bunch of hoops only to tell you, you dont qualify.


Check it out. you got nothing to lose. It might be able to help you and others.

Take care,

June 13 2012 at 3:46 PM Report abuse rate up rate down Reply
Wayne Bradshaw

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May 05 2012 at 11:49 PM Report abuse rate up rate down Reply


April 10 2012 at 7:21 PM Report abuse +5 rate up rate down Reply

The Harp 2 is as phony as can be. What they don't tell you is the lending institutions have the right to limit what percent you are over. Harp 2 say it is eliminated. That is wrong.

April 10 2012 at 5:07 PM Report abuse rate up rate down Reply
1 reply to rayj502's comment

Google: NACA for mortgage help[.

September 15 2012 at 9:21 PM Report abuse rate up rate down Reply

it's just great they are finally trying to do somehting... but what about all the people that got screwed by the banks and foreclosed on? not one thing is being done for them. not one criminal charge has been brought against a single bank officer... 25 billion settlement... what a joke. i suggest you read the settlement and see who actually can even apply for help... he's a clue... of the 5 major banks, only 7 % of all loans are held by them... of that number less than 1% are actually in trouble or in jeopardy of foreclosure... 99% of all loans are ineligible for help...

The reason not a single bank loan officer has been charged is because there is ABSOLUTELY NO EVIDENCE WHATSOEVER that banks did anything improper. There is no allegations that they didn't provide the Truth in Lending Disclosure form, or that haven't met their obligations under the contract.

Sorry, the worst allegation leveled against the banks is that they willing sold a legal product (adjustable mortgages with teaser rates) to willing borrowers, even if it clearly wasn't in the best interest of those borrowers to sign the deals. In other words, the banks are basically being asked to be held liable for the stupidity of their customers.

This was a money grab by the federal government, plain and simple. Nothing more, nothing less.

April 10 2012 at 4:47 PM Report abuse rate up rate down Reply