Principal Reduction

Principal Reduction is a scenario where the bank forgives a portion of the principal amount of a mortgage, is the most revolutionary development in Loss Mitigation history. Principal Reduction represents a solution for homeowners who's home value is "underwater", meaning the value of the home is less than the amount of the mortgage note, by helping them get back on track with a mortgage modification, bringing their monthly payments down to a manageable level and most importantly, stay in their home. Some of the lenders have principal deferment programs where they defer paying off a certain portion of the principal that is above the appraised value. This deferment usually lasts until the homeowner sells, pays off or refinances the property.