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Wednesday, October 20, 2010

Moorpark, Ventura County, CA; What to do when your lender won’t reduce your principle on a loan modification.

But first, this...
Remember all the Robo-signers? Allegations that some of the nation's largest mortgage servicers cut corners in processing foreclosures and filed unsubstantiated paperwork could turn criminal. With documentation errors reported by at least five mortgage servicers, President Obama's Financial Fraud Enforcement Task Force, led by the U.S. Department of Justice, is looking into whether servicers broke federal laws and whether they misled federal housing agencies in the process. Mail and wire fraud may also be an issue.

Moorpark, Ventura County CA – Some homeowners have watched the value of their home be cut by 30-50%. They paid 700k for a house that is now worth 400k. They want a principle reduction, but the lender won’t agree to it.

Discover how other sellers successfully did a short sale and request a free consultation by clicking here.

So they keep on insisting for one. Lenders will drop your interest rate to 2% for five years. But, they are very reluctant to grant principle reductions. Here is why.

They are forced to take huge write off on their books when they give you a principle reduction. No, this is not a “tax” write off.

If they give you a 300k principle reduction, they have to take that directly off that year’s earnings. That hurts earnings, which hurts the stock price, which hurts the likelihood of the people at the top getting bonuses.

This makes principle reductions so rare. Instead, they like to reduce your payment down to the equivalent of a 400k principle amount. How?

By dropping the interest rate to 2%. The lower interest reduces your payment down as much as a principle reductions would have done.

The banks hope that you can limp along for five years until the economy recovers. Hopefully by then housing prices will recover, or you will be able to afford the higher payment after the interest rate reset.
But, many experts do not think the housing market will recover in 5 years, much less 10 years. This is why I recommend a short sale and renting to anyone who is upside down by 30%.

Now, you may be saying, “Of course you do recommend that. You get more sales that way.” Sure, I like more sales.

But, if that was true, then why would I give away free loan modifications kits to homeowners in foreclosure? I would hope that they would be forced to short sale with me.

(Click here to request a copy of our Ventura County Loan Modification Kit that has the instructions you will need to get a loan modification approved with your bank.)

I believe that most loan modification are a temporary band-aid that doesn’t solve the underlying problem. Most people that short sale are already suffering and their credit has been hurt by a pending foreclosure.

What if they accept the loan mod offer and can’t afford the payment reset in 5 years? They may have to stop paying, hurt their credit again, and apply for another loan modification.

Why not wipe out the upside down debt while your credit is already damaged? Agree? Disagree? Please put your comments in the comments section below.

Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at I will contact you for a free consultation.
When we talk, I will explain how the process works in detail. If you prefer, then you can call me at 805-208-0823.

Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.

Thinking about a loan modification? Our Ventura County Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender. Click here to request a copy.

Thanks for reading this,
Chris B Johnson.

Chris is a Real Estate Agent at Prudential Califonia Realty.
Phone: 805-208-0823.
Certified HAFA Specialist, Certified Short Sale Specialist
View My homes for sale at

Which way is the Real Estate Market Headed? Get a Market Snapshot of your neighborhood:
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Chris B Johnson specializes in loan modification assistance and short sales in Ventura County California. Ventura County Loan Modification Help, Ventura County short sales. Ventura County Short Sale Realtor Short Sale Realtor. Ventura County CA Short Sales. Ventura County Realtor.

Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Johnson’s personal views and do not reflect the views of Prudential California Realty. This information on What to do when your lender won’t reduce your principle on a loan modification is provided as a courtesy to our viewers to help them make informed decisions.

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