Can a Loan Modification Reduce the Amount I Owe?

Over the last 2 years lenders and borrowers have struggled to find a happy middle ground when it came to negotiating a loan modification. Lenders wanted borrowers to start making payments again, but borrowers have not had any incentive to do so when the value of their homes in most cases was less than what they owed. It would only make sense that banks would rather reduce the loan balance before going through the costly process of foreclosing on the home, which traditionally costs between 20% and 40% of the homes current value. The next natural was lenders to not only modify the terms of the borrowers loan but to also reduce the principal to put homeowners back in the black.

In 2010 Bank of America was one of the first banks to formerly offer loan modifications with principal reductions under the Homeownership Retention Program (NHRP). The program is offered for those "most at risk" of losing their home. To qualify for this program you will need to provide detailed financials and backup regarding your homes value. Our loan modification book provides all the documents and forms necessary to qualify for the Bank of America loan modification program.

Following suit Chase Mortgage Services has also started offering principal reductions on a very limited basis for 5,000 lucky homeowners. According to our inside sources these were 5,000 randomly chosen homeowners, but one of our clients happens to be one of them. Our client was offered a 50% principal reduction, lowering her mortgage balance from $250,000 to $112,000 and reducing the term from 25 years to 12 years. Again, you must provide detailed financials and apply for the program showing you are suffering a hardship and ability to prove that by calculating your debt to income ratios and provide documented backup. Here is a link to our book which can help you with the loan modification package if you need it: Loan Modification eBook

These are not the only banks that have provided loan modifications that have included principal reductions, but they are the largest and are going to set the benchmark for other banks. In our experience we have discovered that there is a formula to how banks determine if they will lower your payment or reduce your principal and it is simply providing a well put together, complete loan modification package. We recently updated our book to include all the most recent loan modification programs and laws to make the process easier for those who are currently trying to get their loan modification done or for those who have not yet started the process.

If you download the Loan Modification eBook it will allow you to modify your loan in easy to understand steps that is guaranteed to give you perfect loan modification package so your lender can clearly determine which loan modification program you qualify for.

Good Luck, and stay persistent!