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PRINCIPLE REDUCTION |
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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.
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*Legal Disclaimer
While Mr. Kleven has practiced in real estate law for many years, neither he nor any other attorney at Homeowner Relief Lawyers is officially certified by the Sate bar of Nevada as a certified real estate expert. Also, neither Mr. Kleven or any other member of Homeowner Relief Lawyers is a CPA or tax attorney. The information provided on this website is informational, only. The subject matter and applicable law in all legal areas is in a constant state of change. No legal, accounting, or tax advice is given and no attorney/client or other relationship is established or intended. The information provided is from general sources and although we believe it to be accurate, we cannot represent, guarantee or warranty that the information contained in this website is accurate or is appropriate for the usage of any reader. We are independent of cross links and do not warranty their accuracy or applicability. We are primarily located in Nevada and comply with all ethical rules of the State Bar of Nevada. Some States require the wording "This is an advertisement" or other words or information of this nature. The content of this website may be fact specific and dependent upon the special needs and purposes of the visitor. Each situation stands on its own. We recommend that readers of this information consult with their own counsel prior to relying on any information on this website. This website is not intended as legal advice. Reading email or replying to email or accepting telephone calls or returning telephone alone shall not be considered legal advice, or that I have been retained as your attorney. A signed retainer agreement is needed for formal representation. We require that all agreements for professional services be in writing and signed by the Firm and the client. No professional relationship will be deemed to exist unless and until an agreement for professional services has been signed by both client and attorneys after appropriate interviews and conflict checks. While the attorneys at Homeowner Relief Lawyers are licensed in Arizona, Nevada, and Utah, they are primarily located in the State of Nevada.
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