Confusing Principal Reduction

I had hired a company in March Paid them $1500.00 to get a loan modification. Then in June they went out of business. This guy said he would take our loan with him to another firm.

So another attorney filed the papers with Bank of America for the loan modifiction. Basically that was all he did. He told us we could check with Bank of America ourselves. So far there has been nothing.

We went to see a bankruptcy attorney and he said that we need to get this loan modified.

I talked to my Father and he asked me to find out if it was possible if the Bank would settle the loan for 50% of what is owed. Will they do this?

Thanks for any and all help.

Noelle

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Hi Noelle,

It’s possible that Bank of America will do a short payoff to you at 50% of the balance.  Factors that might go into that are the value of the property, the level of delinquency, your financial condition, and the type of loan that you have.  If it were me, I wouldn’t volunteer that the funds would be coming from Dad, but perhaps try to get an approval for a short refinance.

A short sale would have a much greater likelihood of approval; however, a relative would probably not be able to be the buyer.  I believe it all has something to do with: if the bank gives one borrower a principal reduction then every borrower will want a principal reduction.  The fear would be an increase in ruthless default.

Thanks for the questions and hope this helps.

Paul