According to Bloomberg News, it is becoming clearer that the better way for lenders to deal with defaulting borrowers who are underwater on their mortgages is to offer them a reduction in the principal on their loan as opposed to lowering their interest rate. Doing so restores the feeling of equity for the homeowner. The statistics are proving this true:
Nearly 40 percent of all private-label mortgage modifications in 2012 provided some principal relief, up from less than 30 percent in 2011 and about 10 percent in 2010. More importantly, those loans are performing very well: Only about 12 percent of principal modifications made in 2011 have gone back into default, compared to 23 percent for interest-rate modifications and 30 percent for modifications that provide neither principal nor interest-rate relief.
If you are a homeowner facing foreclosure or just owe more on your mortgage than your home is worth, call The Law Office of William J. Reinhardt, Jr. at 718-377-8880 or send an e-mail to firstname.lastname@example.org . The initial consultation is free.