Distressed Homeowners are those who STILL have a home that is underwater, or have negative equity. As recently as June 2015, there is still an estimated 7.1 million homeowners who have 1st and 2nd mortgages that have negative equity, where the balance of the loan is greater than the value of the home. There is no refinance option available for many of these homeowners! No refinance options exist for those underwater with conventional non-Fannie Mae, non-Freddie Mac 1st mortgages and no options exist for 2nd mortgages and HELOCs either. A recent data report by RealtyTrac showed there are over 1.8 million underwater resetting interest only HELOC homeowners, where HELOCs that are interest only and have not gained any equity are resetting to fully amortized payments.
In spite of this, the great majority of those STILL in underwater homes have continued to make mortgage payments on time for years. The mortgage industry MUST look at refinance options for these underwater homeowners immediately! The only option available through lenders is a modification where hardship MUST exist and delinquency is what gains lender attention.
If policy is not changed and nothing is done, the U.S. housing market can plan to see more defaults, and more homeowners will have credit destroyed…. simply because they are underwater on their home.
Help for Distressed or Underwater Homeowners