Underwater Loans

As a mortgage owner, you may come across a number of terms you may be unfamiliar with but need to understand in case you ever have trouble making your monthly mortgage payment. An underwater loan may be one of these terms. An underwater loan is one that has sunk below the book value, either because it is non-performing, its interest rate is lower than the market rate, the market value of the collateral is now less than the outstanding loan balance, or there is another principal source of the loan besides collateral.

If you currently have an underwater loan, you unfortunately have limited options for modifying your mortgage. However, by consulting with a skilled and aggressive attorney, he or she can discuss your options with you so you can keep your home and protect your investment.

Modification Options with Underwater Loans

Thanks to the United States government’s Making Home Affordable program, borrowers with a mortgage that has a balance greater than the property value do have some options for modification. Ideally, lenders require at least 20 percent equity in the property before they consider modification. You may qualify for refinancing through the Home Affordable Refinance Program (HARP) if:

• Your loan is between 105 and 125 percent of the home’s value
• You haven’t had a missed payment over the last year
• Fannie Mae or Freddie Mac owns the loan

If you have an underwater mortgage and have also missed payments, you may be able to qualify for the Home Affordable Modification Program (HAMP).

Contact Us

For more information about modification options for underwater mortgage owners, contact the Maryland mortgage modification lawyers of Chaifetz & Coyle, P.C., today at 443-546-4608 and discuss your legal options.