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(Click here for LOAN MODIFICATION or here for SHORT SALE)

A decrease in the principal owing on a loan, typically a mortgage, for the purpose of lessening the outstanding principal balance on qualifying properties that have negative equity. Principal reduction is normally employed to prevent foreclosures on properties, which may be more costly to financial institutions than a reduced principal owed to them. As a result, principal reduction typically requires specific requirements in order for a homeowner to qualify, such as ability to commit to payments, to whom a mortgage payer owes the principal and whether the total balance owing on the mortgage is greater than the value of the property.

According to the Congressional Budget Office (CBO), there are more than 10 million homeowners who have mortgages still in negative equity, yet the CBO estimates that only about 200,000 of them could even be eligible for a principal reduction. That is only 2%. 

You may be eligible for a principle reduction if:
  • Your mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac.
  • You owe more than your home is worth.
  • You occupy the house as your primary residence.
  • You obtained your mortgage on or before January 1, 2009. 
  • Your mortgage payment is more than 31 percent of your gross (pre tax) monthly income. 
  • You owe up to $729,750 on your 1st mortgage.
  • You have a financial hardship and are either delinquent or in danger of falling behind.
  • You have sufficient, documented income to support the modified payment.
  • You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.
  • You also meet the additional qualifications of your specific bank or lender.
Please call our office at 702.589.7520 if you think you are a candidate for a loan modification or a principle reduction.