Are More Homeowners Walking Away?

It seems that in these trying economic times, more and more homeowners are simply walking away from their home loan mortgages and looking for a new start. For hundreds of thousands of homeowners (if not millions), their homes are worth less than what they owe and they are unable to make the payments any longer. As a result, they see that walking away and letting the house go back to the bank is their only reasonable option.

But a recent report shows that most homeowners are not willing to do this. Even if they find that they owe more on their homes than its actual worth, they would continue to live in it and do their best to make the monthly payments so they can stay in their home. About 59 percent of the homeowners who found themselves underwater said they would stay in their homes regardless of how much their home’s value dropped compared to the amount they owe. Only 41 percent of those in the survey said that they would think about walking away from their home and letting it go through foreclosure.

Of that 41 percent, only about small fraction – about one percent – said that leaving their home to go back to the bank would be their first choice if they were no longer able to make their monthly mortgage payments.

If you are in this proverbial pickle and your home is worth much less than what you owe on it, what are your plans? For those who plan to stay regardless of the financial difficulties, the federal government is offering a program to help. The Home Affordable Modification Program, or HAMP, is an initiative that strives to lower the monthly payments on mortgages through a loan modification. With this program, the government essentially works with the banks and lenders to help reduce the monthly mortgage payments of troubled homeowners.

The HAMP initiative has three options for homeowners who are in trouble. They can either refinance their mortgage through the Home Affordable Refinance Program (HARP), modify their existing or second mortgage through government programs or consider other alternatives to foreclosure with the Home Affordable Foreclosure Alternatives Program, or HAFA. In order to qualify for this program, you loan must be owned or guaranteed by Freddie Mac or Fannie Mae. You must also be current on your payments and be able to make the payments on your modified loan.

You can learn more about these government programs designed to help troubled homeowners here.

What are you doing to make ends meet so you can pay the mortgage every month? Are you making extreme sacrifices? Have you done everything in your power to make your payments and still unable to make it happen? Let us know how you are handling this situation. Others may get an idea to help them get through these trying times from you.