For some homeowners, the decreasing values of their properties could mean that they will end up with more mortgage debt than their home is really worth. This situation, referred to as an underwater mortgage, can be very difficult to deal with.

Some lenders have provided these homeowners with a reduction of their loan amount. Both Citigroup and Bank of America have offered the reductions, although it has not been widely available.

Still, most other lenders have hesitated in offering these mortgage principal reductions. And as more and more homeowners find themselves in an underwater mortgage situation, lenders are receiving more requests than ever to help those who need principal reductions.

Reductions of mortgage principal have also been offered through a principal forgiveness plan. Under this program, those who make regular payments on their mortgage were offered a reduction, though this has not been widely used either. Still, there are other ways to receive help with an underwater mortgage, such as refinancing offers from the Home Affordable Refinance Program.

Nonetheless, analysts suspect that additional solutions should be available for homeowners with underwater mortgages. Many feel that market prices have undergone inflation, and that underwater mortgages are simply too severe for many homeowners considering this.

Some analysts also think that forgiving or lowering mortgage principals for those with an underwater mortgage could be essential in returning home prices to their proper values.

Photo courtesy: Brock Builders / Flickr

Home Mortgage Servicing Company

The American Home Mortgage Servicing company based in Texas has been accused of violating the Texas Debt Collection and Deceptive Trade Practices Acts. Allegations from the state, including Attorney General Greg Abbot, say that AMHS used unlawful tactics to coerce payments from homeowners.

The methods used by AMHS violated many Texas and Federal laws regarding fair mortgage practices. The company took advantage of homeowners who weren’t able to pay their mortgages off.

They made false claims regarding the late and missed payments of homeowners and used those claims to charge excessive late fees or extort payments out of the homeowners. AHMS also failed to provide homeowners their due credits for making payments on time.

AHMS actually worsened the situation for many homeowners, especially those who were facing foreclosure. The AHMS company claimed to offer services to homeowners in financial trouble, but they did little to deliver on their promises.

Many of the services that they claimed to do to help homeowners actually made things more difficult for them. The loan modifications that AHMS coordinated often caused the homeowners to owe more money in each monthly payment, making it even harder to meet the monthly mortgage payments.

Photo credit: woodleywonderworks / Flickr

Clearwire

The wireless internet service provider Clearwire announced their new 4G network on Monday. Called Rover, the service will run on a pay-as-you-go payment model.

The network is available now in all of Clearwire’s markets. Sprint Nextel owns 51% of Clearwire, and they currently use the company to power Sprint’s 4G-WiMax network.

Clearwire has proven to be an unprofitable venture in the past. They have been unable to make any money on their 4G network, and have lost nearly $1 billion this year alone. With Rover, it seems that Clearwire is trying to obtain more customers for its mobile broadband service.

There are two devices that will allow consumers to connect to Rover. One is a USB modem called the “Stick” that will retail for $100, and the other is the “Puck” which allows consumers to hook up the 4G broadband to as many as eight devices for $150. Prices for using the network itself will vary, with usage for a day, a week, and a month costing $5, $20, and $50 respectively.

Although Clearwire is the only service provider to offer a 4G network, other companies will soon be entering the market, with Verizon and AT&T both planning to offer their own network over the next year.

Still, Clearwire says that they will have an edge on the competition by attracting younger internet users with its pay-as-you-go model.

Government Mortgage Debt Relief

Banks have begun to increase the amount of loan modifications that they are offering to their clients, surpassing the rate at which government mortgage debt relief is helping consumers. According to some analysts, these banks are coming to realize that excessive foreclosures are not the best solution for consumers or the banks themselves.

With their own programs for preventing foreclosures, banks are doing almost two times the amount of loan modifications than they were previously doing under Obama’s Home Affordable Modification Program, or HAMP.

Many banks have received criticism for their lack of actions in helping homeowners. As the mortgage crisis began to cause problems for many people in 2007, servicers of loans decided to tack on homeowners’ missed payments, which only added to the problems and criticism.

Still, a significant amount of banks are creating their own initiatives to help with the many foreclosures nationwide. Loan servicers have finished almost 644,000 loan modifications this year. Obama’s HAMP program, however, has only completed 332,000 modifications.

More and more homeowners are looking to banks to do modifications outside of HAMP, which has been criticized for its ineffectiveness. Advocates for housing are calling on banks more and more to help homeowners by reducing principal. And banks are beginning to respond, with Wells Fargo and others reducing billions of dollars in principal on thousands of loan modifications since 2009. It seems that any homeowners are looking to banks to help them where Obama’s program has – unfortunately – not.

Photo courtesy: TheTruthAboutMortgage / Flickr

Federal Government Credit Card Debt Relief

According to a TransUnion report, Americans are carrying even less money on credit cards. The question is, should federal government credit card debt relief efforts be given credit, or have consumers simply pulled up their own bootstraps?

The average credit card balance of American consumers was around $4,950 in the year’s second quarter, down from a significantly higher average earlier in the year of $5,165.

This equates to more than a four percent drop. Balances on credit cards for American consumers has dropped for five quarters straight now.

Ezra Becker, a financial services director at TransUnion, says that this fifth consecutive drop is evidence that American consumers are continuing to “pay down their credit cards” as a result of increased levels of unemployment, as well as an uneasy feeling economically for many Americans.

Another drop occurred in late credit card accounts. The number of accounts nationwide that were over 90 days late on payment was reduced by over 17 percent since the first quarter of the year.

By reducing their levels of debt and achieving a better financial standing, American consumers are likely to find some significant advantages. Lenders will be more likely to lend out credit cards to consumers.

Also, lowered debt for individual consumers could increase credit scores. This will make it much easier for these consumers to qualify for loans.

Photo courtesy: The Consumerist / Flickr