Chicago IL – The Stop Foreclosure Institute recently received a question from Luis. Here is Luis’s Question.
“I am working on a loan modification on my home. I just don’t want to be upside down and want a fair interest rate. Why should I pay on a mortgage that is twice as much as my home is worth, plus the interest on that mortgage? It just doesn’t make sense.
How can I get a loan mod with a fair interest rate where I am repaying what my home is worth today? Thank for your help, Luis.”
Here was our answer. You are asking for something that most lenders don’t like to do. Lenders don’t like principal reductions. Here is why.
Principal reductions usually have to be written down right away on their financial books. If you owe them $300,000 and they reduce your loan principal to $150,000, then they immediately have to reduce the company’s earnings by $150,000 for the year.
If they do that on enough loans, then it hurts the CEO’s ability to get a bonus. He may even risk losing his job. I don’t offer much sympathy to CEOs, but that’s how it works.
Here is what lenders like to do instead. They will reduce your interest rate to 2% for 5 years. After that, the interest rate will go back to the original level.
That way the write off will be much smaller than $150,000. It might be a $30,000 write off. That makes a much smaller difference on the CEO’s bonus for the year.
It’s also one of the reasons that most loan mod programs don’t work. The banks aren’t willing to be realistic.
It’s also why I think a short sale is the best principal reduction plan. You get to erase the bad debt. Rent a home for 2-3 years and then buy a new one at today’s market level.
That way you guarantee your principal reduction and don’t waste time arguing for a principal reduction with someone who isn’t allowed to give it to you. 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 firstname.lastname@example.org. I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at (312) 953-6725
Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.
Remember to visit my Chicago short sale blog for news and information on short selling in Chicagoland www.ShortSaleSuperMan.com
Thinking about a loan modification? Our Chicago loan modification kit has the instructions you will need to get a loan modification approved with your bank. email@example.com.
View My homes for sale at www.BetterLivingRealty.com.
Phil Buoscio, is a broker with Better Living Realty he leads the sales team “Phil Buoscio Team” and specializes in short sales in Chicago Illinois. Chicago Loan Modification Help can be referred to you. We don’t do loan modifications ourselves but we work with those who do.
We know Chicago Short Sales. I am a Chicago Short Sale Realtor. Chicagoland Short Sale Realtor. Chicago IL Short Sales. Chicago Realtor. We do business in Pilsen. McKinley Park. Bridgeport. Wicker Park. West Town. Ukranian Village. Lincoln Park. Near North. River North. East Village. Logan Square. Uptown. Edison Park. Portage Park. Hermosa. Lincoln Park, South Loop, West Loop. Bronzeville. Hyde Park. Kenwood. Oak Park. Brookfield. Cicero. Berwyn. Evanston. LaGrange. LaGrange Park. Riverside. We sell condos, single family homes, lots, land, multi units, two flats, three flats, etc.
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