For those of you who have taken the first steps to become HREU Certified Mortgage Loan Modification Specialists…Congratulations! Get ready to become the most popular person at your neighborhood block parties. The simple fact is that millions want to do a mortgage loan modification and in many cases MUST do a loan mod. At least for the next few years, being a loan modification specialist will keep you in huge demand.

(Not yet a HREU Certified Mortgage Loan Modification Specialist? Watch this Free Video to learn the exact step-by-step process.

For those of you who have become Mortgage Loan Modification specialists get ready to answer this next question……

Can I Wipe Out The Negative Equity In My Mortgage?

Principal reductions in mortgages is a bit of an urban myth. Here is why: The problems with this are two-fold. First, it becomes an immediate loss for that lender - a hard loss. They were owed $400,000, and now they are only owed $300,000. That’s $100,000 in company equity gone. Second, it provides an opportunity for current owners to make a profit on money that was previously owed to that lender. If the person is able to sell for $350,000 (whether immediately or years later), they still make $50,000 less the expense of selling the property, while the lender is just out in the cold for that extra money. You get them to give you money so you make a profit? Lenders don’t like that math. The chances of them agreeing to do a principal reduction are very slim. The figure quoted was 1.6% of mortgage modifications that actually happen include some sort of principal reduction - one in sixty - and those typically include issues like death or disability of the main breadwinner. Do you want to spend the $3000 to $7000 modification costs for a one in sixty chance, or do you want to do it correctly with an approach that is about 60% or higher (depending upon your lender) likely to work?

What lenders are often willing to do is modify the loan in such a way as to reduce the interest rate, or payments owed, in some fashion. This doesn’t magically give you money, but it does make the dire consequences of owing too much money bearable. It is far better in most cases for your long term financial health than walking away or going through foreclosure. If you owe $400,000 at 8%, reducing that interest rate to 6% will make as much difference to affordability as reducing your principal by $75,000 and starting the loan over combined. Not to mention that every successful loan modification is a relief from delinquency. You start over on the newly modified loan completely up to date on your payments.

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