dcsimg
We research, you save.
Got Questions On Rates? (855) 610-2972

Mortgage rates are rising but do you know where they're going? Check out our latest Two-Month Forecast.

Are there any relief programs for underwater mortgages NOT backed by the FHA, Freddie Mac or Fannie Mae?

By   |  Posted in Ask The Expert

Q: Do you foresee any future relief programs for underwater mortgages that are NOT backed by FHA, Freddie Mac or Fannie Mae? My mortgage is through my local credit union.  I am $25,000 underwater, I pay my mortgage on time, and I would like to take advantage of the low refinance rates too.

A: You should first make certain that your loan isn't owned or backed by Fannie Mae or Freddie Mac. A loan can be sold to those entities but still be serviced by your local credit union. It doesn't hurt to check.

If not, and at the moment, the answer is "probably not." That is, unless your credit union was interested in writing down the balance of your loan and allowing you to refinance into the FHA's "Short Refi" program. Unfortunately, a lender with a good, performing loan on the books like yours probably isn't interested in taking the principal and profitability hit which would accompany such a move. Shareholders and members would likely balk at such an offer.

While there are presently no "programmed" responses backed by the government for your situation, any given lender might be able to offer you a "private" loan modification of some form. Any such arrangement would be negotiated on a one-off basis, but it doesn't hurt to inquire. Perhaps you might be able to negotiate an arrangement where you can cover the lender's amount of required writedown in order to be eligible for a Short Refinance, for example. However, the out-of-pocket expense might be considerable, diminishing the value of any refinance.

The bottom line is that you probably won't be able to take advantage of today's low interest rate environment, and it's cold comfort to know that there are probably hundreds of thousands (if not millions) of other homeowners in the same situation as you are.

More help from HSH.com

  • Will the debt forgiven from my loan modification be treated as income and taxed?

    Mortgage debt forgiven via due to principal reductions in HAMP and other mortgage modifications aren't subject to tax, but there are conditions you should know.
  • HSH.com on the latest move by the Federal Reserve

    The Federal Reserve concluded a meeting today with no change to the federal funds rate; the target range for the key policy tool remains 1.25 to 1.5 percent.
  • How to refinance when you are self-employed

    Refinancing rules aren't the same when you are self-employed. This article explains how self-employed borrowers can successfully refinance.
  • Can home price trends predict a Super Bowl winner?

    But is there any specific relationship between home prices, mortgage rates and success in the NFL? Of course not. However, it's fun to forecast the winner of Super Bowl LII based off certain housing market characteristics!
  • Advantages of a FHA mortgage in 2018

    Although the cost of an FHA-backed mortgage isn't likely to get any cheaper in 2018, access to credit for homebuyers with less-than-stellar credit should improve.