Here’s an example in Tampa, Florida this month for one of our foreclosure clients who wanted to keep her house and avoid the possibility of a deficiency judgment:
New monthly payment: $933.45 with escrow Old monthly payment: $1,491.35
New interest rate: 4% fixed Old interest rate: 7.75 % fixed
Term: Unchanged at 24 years.
No balloon or equity sharing down the road.
Principal reduction $99,966.30 to the present fair market value of $151,000.
A total of 32 payments were outstanding since October 2009 when we went to mediation.
Don’t give up. When this client first hired us, we likely said that principal reduction was very unlikely – we tell all our clients this. But she didn’t give up and neither did we.
Will a homeowner see a principal reduction from a credit union, probably not. More likely that homeowner will be sued for the unpaid balance as Suncoast Schools Federal Credit Union is one of the largest filers for deficiency lawsuits in the Tampa Bay area. Ocwen remains the best servicer in our experience for principal reductions and a streamlined process for modifications. Everyone else is somewhere in the middle.