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Posted on October 21, 2009 by Anthony Dean | Posted under Mortgage Refinance
Loan Modification Help Center – Banks Struggling with Troubled Mortgages
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Of all the ways to get a loan modification, a principal reduction is one of the least likely options because banks will potentially lose the most money that way. The positive for the banks is that if they take the hit now, they can boost their chances of being repaid. The banks treat a principal reduction as a right off for tax purposes. Most loan modifications are done through reducing interest rates or extending the term of the mortgage (from 20 years to 30 years for example). This will give homeowners a lower monthly mortgage payment, but really won't affect how much money the banks will get for the loan. With a principal reduction, the banks lower the principal they are owed under the loan, which guarantees they will lose some money. Principal Reduction A principal reduction is a way to reduce the overall principal balance owed. For example, if a homeowner were to take out a 30 year mortgage for $350,000 with a 5 percent interest rate, a typical loan modification would either make the 30 year mortgage a 40 year or lower the interest rate to 4 percent. With a principal reduction the actual amount of the mortgage would be lowered to $300,000, saving the homeowner money in the short term and the long term. In the past, banks and mortgage servicers were unwilling to grant principal reductions because of how much money they would lose. However, with recent events leading most banks to realize that financial losses are inevitable, banks are more willing to negotiate with California loan modification attorneys who can present a solid case for the homeowner. In one instance, a homeowner in Riverside County said his lender, the Wachovia Unit of Wells Fargo & Co., agreed to a principal reduction on his mortgage of 18 percent of the original amount. As a result, his monthly mortgage payments went from $2,100 to lower than $1,500. The California loan modification attorney team at the The Loan Modification Help Center is focused on providing top-notch legal representation to homeowners struggling to may their mortgage. While many homeowners are struggling with foreclosure, many people who sought the help of a California loan modification attorney have been able to stay in their homes and get the loan modification they needed. If you are a homeowner who has lost a great deal of value in your home, or if you have received a foreclosure notice, you may want to contact a qualified California loan modification attorney. With the help of a skilled, experienced California loan modification attorney, you could get the interest rate on your mortgage lowered, the term extended or a principal reduction, all of which will lower your monthly mortgage payments. Visit us at The Loan Modification Help Center or call 800-486-9836. Legal Disclaimer The information contained herein is provided for general information and advertising purposes only and is not intended to convey a legal option nor legal advice for any particular case or situation. Nothing in this article shall create an attorney-client relationship. Nothing sent to this law office via e-mail shall constitute an attorney-client relationship. Nothing contained in this article shall be construed to be a guarantee or prediction of result. Prior results are provided for general information purposes only and do not guaranty, warranty or predict a similar outcome with respect to any future matter. Results achieved depend on individual circumstances and not everyone will qualify or be successful in restructuring their mortgage loan. About The Author: Anthony Dean has helped hundreds of homeowners avoid foreclosure. He can be contacted at http://www.feldmanlawcenter.com or cal 800.662.5133 |
Tags: LOAN MODIFICATION, LOAN MODIFICATIONS, AVOID FORECLOSURE, LOAN MODIFICATION COMPANY
