Principal Reduction for Underwater Homeowners
The Federal Housing Finance Agency (FHFA) has announced a plan that will help some homeowners who are severely underwater reduce the principal on their mortgages. You could qualify if:
- The balance of the principal on your mortgage is $250,000 or less.
- You are at least 90 days delinquent as of March 1, 2016.
- Your home is valued at least 15% less than the balance of your mortgage.
- Your loan is backed by Fannie Mae or Freddie Mac.
If you qualify, your principal balance could be reduced by up to 30% of what you owe. However, the principal can’t be reduced below 15% of the market value of your home. At the end of the day, you would still be underwater, just less deep.
Only about 33,000 people will qualify for this program across the US. How do you find out if you’re one of the lucky few? Your lender should contact you no later than the end of this year and inform you if you qualify!