The principal loan reduction program includes all types of mortgages and especially those mortgages not owned or guaranteed by Fannie Mae or Freddie Mac. The Obama government in a new step has arranged to extend much needed help to United States homeowner’s families and to take the benefit of HAMP. The Obama administration has made arrangements to pay incentives to the mortgage lien holder, to the homeowner and also to the mortgage service.
The eligibility requirement for reducing the principal under the government mortgage reduction program is that you must have an underwater home mortgage. Also your mortgage need not be owned Fannie Mae or Freddie Mac. There are many other guidelines which you are required to meet in order to qualify for the principal reduction program. One of them is that you must not have a record of any illegal convictions regarding mortgage or real estate transactions in the past.
Homeowners can now hope to lower their monthly mortgage payments with the Obama mortgage interest reduction program or the government loan modification plan. To achieve financial aid the lender must take a sequence of steps to first reduce interest rates to as low as 2%, then loan modification in term extension or forbearance. If such steps do not help the lender and borrower reach a monthly payment of 31% gross monthly income, then a PRA principal reduction can be applied.
In the principal reduction loan modification, the amount that is the reduced principal amount will be divided into a principal amount and PRA Forbearance amount. The homeowners are required to continue making payments along with interest on the new lowered principal amount. When the homeowners successfully make regular payments for three years, they can be free from having to pay the forbearance amount. You can hire a loan modification attorney to negotiate for the principal balance reduction with your mortgage servicer.
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