As Home Values Sink, CredAbility Counsels More Borrowers

With more homeowners finding themselves underwater alongside the availability of programs offering potential relief, ""CredAbility"":http://www.credability.org/en/homepage.aspx reported that it recently counseled the highest number of homeowners since June 2011.

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CredaAbility, a national nonprofit organization that offers free counseling to homeowners, provided guidance and advice to 6,433 homeowners in February, a 16 percent increase compared to January.

The nonprofit credits several recent events for the uptick in activity.

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""In the past several weeks, demand for counseling has increased for several reasons,"" said Michelle Jones, SVP of counseling for CredAbility. ""We hearing from more homeowners who are 'underwater' who have a real opportunity to reduce their interest rates and monthly payments. Other homeowners want to know about possible principal reduction options, while others with new jobs are seeking loan modifications.""

According to a recent ""CoreLogic"":http://www.corelogic.com/ report, 11.1 million, or 22.8 percent of residential mortgages were underwater for the 2011 fourth quarter.

Opportunities for underwater homeowners include HARP 2.0, which now allows those who owe more than 125 percent of their home's market value to refinance. The program is only for those with either a Freddie Mac or Fannie Mae-backed mortgage.

Another form of relief homeowners are looking into is a principal reduction through HAMP or through the $25 billion settlement between five major mortgage servicers and 49 states. Under the settlement, borrowers may qualify for a principal reduction, but homeowners will not be selected for the program until later this year.