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Monday, September 6, 2010

Balance Reduction an Alternative to Loan Modification

A balance reduction program is a great alternative to a loan modification for several reasons. One with a balance reduction your loan is paid off at a reduced price and restructured to create a much more manageable monthly payment. Two a Balance Reduction is a permanent solution not a temporary modification that can revert back to its original terms. Three a Balance Reduction can be performed whether you a behind or current on your loan. A Balance Reduction only requires that your property to be upside down by at least 75%.
In a Balance Reduction Program your loan is negotiated with your lender, just like in a short sale. Then your original loan is bought out from your bank. And restructured by your new lender into a new loan thus reducing not only your total mortgage amount but also your monthly payment.
A Balance Reduction is a new loan so there is no chance for it to revert back to the original terms of your old mortgage like so many loan mods are doing today. This gives the home owner a fresh start, and if needed credit counseling enabling them to improve on the loan interest rate and terms.
Unlike  a loan modification you do not have to be behind on your payment to apply for a Balance Reduction. Current or behind on payments the only requirement is that your property be at least 75% upside down in its current LTV.
The Federal government has just started a Balance Reduction program in which it requires banks to perform a Balance Reduction if a home is 80% upside down in its current loan, but it has not been tested yet and there are no statistics out on whether it is being done successfully yet.
Private Equity backed companies like Repair Financial Problems have been successfully performing  Balance Reduction loans in Dallas, Miami, and several other markets for several years now. RFP has just launched its nationwide campaign which covers all 50 states. All loans are private equity fund backed and serviced by a private investment company. Clients are placed in programs according to credit worthiness 500+ fICO is required.
For more information on the Balance Reduction program and other programs offered please contact me at
Repair Financial Problems - Helping customers Nationwide!

Adam T Barrera