Although the numbers are steadily decreasing across the country, many homes and homeowners are faced with underwater mortgages. For those who don’t know, an underwater mortgage is a mortgage in which more is owed than the current value of the home. During the housing market crisis, large numbers of homes went underwater due to plummeting home values, and many who bought at inopportune moments were left with debts well exceeding the value of the property they now owned.
As a result, the government instituted a mortgage modification program favorable to these poor souls called the Home Affordable Modification Program (HAMP). Under HAMP, many homeowners have been able to get mortgage modification approval at rates more in line with the current value of their homes. The refinancing options made available by HAMP have been a blessing to people suffering under crushing mortgage debt, unable to get out from their underwater mortgages. It has not all been perfect, of course, and the redefault rate has been shown to be worryingly high, but overall it has been a good thing for the average homeowner in the face of the crumbling housing market.
Not everyone is eligible for HAMP, but even if you are one of those ineligible, you still have options. Bankruptcy can help strip away unsecured debt and even second liens on the home. Defending against financial hardship and foreclosure can be tough. The key is to open up a line of communication with your loan servicer and to seek representation by an experienced Cincinnati bankruptcy lawyer.