The New Rules of Principal Balance Reduction
A Principal Balance Reduction can be accomplished a few ways:
• Short Pay Refinance. The Lender accepts a payoff lower than the full amount they are owed and the
Homeowner gets a new loan with a new Lender.
• Investor Note purchase. A hedge fund would negotiate to buy the actual note at a discount from the
current lender and then they would adjust the current balance and collect payments from the homeowner.
the loan a homeowner may be entitled to monetary damages and then negotiate to get a principal reduction.
loan a homeowner may be entitled to monetary damages and then aggressively sue for a principal reduction.
• Bankruptcy. Depending on how the property is being used (primary residence or investment) and factoring in
the financials concerning negative principal balance, current fair market value and total homeowner debt, Bankruptcy
• Quiet Title Action. A Quiet Title action is a Court procedure of legal action to remove the lien whereas the
Homeowner is challenging the validity of the debt. Best used in combination with Material Evidence from a
Principal Balance Reduction is:
Who should go after a Principal Reduction?
• Homeowner who owes more than what the home is worth today "upside down" or "under water"
• Pre-foreclosure, FORECLOSED or even recently EVICTED after foreclosure is possible
• Anyone with an Option ARM (negative amortization)(pick a payment) type mortgage
• Anyone with an Adjustable Rate Mortgage where their payment have increased
• Anyone where the original Lender is now out of business has a greater chance
• Anyone with a loan originated between 2001 - 2008 has a greater chance
• Currently behind on payments, history of late and/or partial payment
• Anyone who suspects their Lender of Predatory Lending
• Anyone who suspects unfair practices by their Lender
• Anyone who was bait and switched at time of closing
• Anyone denied a Loan Modification
• Every Homeowner reading this
Who can qualify?
• Any property use; primary residence, vacation home, investment property or commercial
• Any Property type; Single Family, Condo, Townhouse, Residential Multi Unit, Commercial
• Must be open minded to take on something you never thought you would have to do
• Must be willing to pay for the cost of services performed by industry professionals
• Must be willing to ask for help by seeking out those people doing good for others
• Self Employed, Regular W2 Employee, 1099 Independent Contactor are all OK
• Must have steady verifiable monthly income
• Any home value, No minimum or maximum
• No requirements for length of time on title
• No requirements for length of time on job
• Any and all credit ratings will qualify
• No additional assets required
• Co-Borrowers are OK
• Notice of Default OK
• Pre-foreclosure OK
• All 50 States
How Long Will the Process Take?
No standard time frame, varies on a case by case basis
• If the Material Evidence against the lender is strong it may take only 3 months to complete
• If Litigation is involved and the Lender fights the process it may take 6-12 months (note: if a debt is
in the process of a dispute the lender cannot collect payments and cannot report lattes to the credit agencies)
Guarantees and Warrantees
There are no guarantees when starting any type of Principal Reduction Program
Actual results are on a case by case basis and are dependent on;
• How much is currently owed
• Fair Market Value of the property today
• Violations found that were committed by the lender
• Options available based on violations found in the existing loan
• How far the homeowner is willing to take the process based on those options
Benefits of the Principal Reduction Program for the Homeowner
• Lower your monthly payment
• No Credit Score qualification required
• Build Equity with each monthly payment
• Secure future with firm control of the property
• Reduction in principal balance at or below current market value
• Property Taxes and Property Insurance satisfied at the same time
• No Tax Repercussions. Consult with your Tax Advisor for further information
• Keep your home, no need to move out, never lose Title/Ownership of your home
• Rebuild your credit with no permanent scars to prevent you from getting any future loans
Possible Costs the Homeowner could pay depending on which program type
• Total out of pocket fees would depend on violations found, options available and how far to
proceed with those options
• Short Refinance or Investor Note Purchase could have total out of pocket fees as low as $795,
while some complicated Bankruptcy cases where the Lender fights the claim could go as high as
• The actual cost to do nothing could be hundred of thousands of dollars
How much of a Principal Reduction can you get?
20-100%. Yes 100% has been done on some extreme cases.
Can a Principal Reduction be done with any Lender?
Yes, but they won't just tell you that because, Banks are big time investors and master negotiators.
Banks are in business to make money. Two things your bank will never tell you; they are distressed
because of the market and they are willing to participate in any solution that would cause them to
Investigate Your Loan Before You Attempt Negotiations!
The best possible results
If you want the best possible results, priority treatment and timely responses from your lender you
need material evidence. Principal Reduction negotiation should only be attempted after completing
from you lender because of a hardship? You may be able to turn the table on the lender, seize
control of your situation and go on the offensive.
Forensic and Securitization Audits reveal the problems to both parties
A Forensic Audit is a detailed investigation of your loan documents from the time you applied for
credit up to and including origination. The investigation is done by experienced auditors, who are
well versed in the Local, State and Federal laws that protect consumers and guide lending
until the present day. If any violations are found you can get much better results and open up
The desire to solve the problem is stronger for both parties
Lender that the real reasons behind their inabilities to pay or continue to maintain payments is
because the Homeowner is the injured party. When you can reveal to your Lender all the violations
that exist in your loan, not only have you shown why you have struggled with the payments, but
you have shown the problems the Lender has too. It is in the Lender's best interest to get this
situation resolved and it is in both parties best interest if these violations can be resolved by
accepting a Principal Reduction which would correct past violations and give all parties a winning
and sustainable relationship.
Equity is neither created nor destroyed, it only changes hands.
YOU may be able to get your equity back.
Three Step Process
Step 1 Pre-qualification
Free no obligation consultation to gather information in order to determine the best option to meet
the goal you would like to accomplish.
Step 2 Processing
• Educate you on what is happening in the industry today
• Inform you about the best option to accomplish your goal
• Explain how the process works from start to finish
• Discuss possible outcomes towards accomplishing your goal
• Gather required documents and submit complete package to assigned representative
• Verification of receipt of all required documents
• Complete application and collect payment
• Submit file for processing
The first process of a Principal Reduction should always be to find material evidence to prove your
case. From 2001 until 2008 the financial institutions committed many errors, omissions and fraud
when lending money for home loans due to lack of governmental oversight in conjunction with
Wall Street greed.
The best way to find material evidence of lender wrongdoing is to audit everything about your
Loan from the time you filled out the loan application until the present day.
Two tools are used to investigate if any errors, omissions or fraud exist against your lender.
Origination, when you signed the promissory Note.
2. Securitization Audit. This investigates the activity after the time the lender received your signed
promissory Note, everything they did with it and if there have been any unfair practices in the
servicing of the loan up to the present day.
Homeowner Required Documents
• Final Loan Application (Form 1003) (both initial and final if available)
• Final Truth in Lending Disclosure (both initial and final if available)
• Notice of Right of Rescission or Right to Cancel (refinance only)
• Mortgage broker/loan origination agreement (if applicable)
• Loan Modification acceptance documents (if available)
• Mortgage/Deed of Trust and any riders attached
• Property appraisal report (if available)
• Final HUD-1 Settlement Statement
• Most recent Mortgage statement
• Good Faith Estimate
• Promissory Note
Step 3 Resolution
• Present Material Evidence to homeowner so they can make an informed decision to move
• Present package to lender and negotiate for Principal Reduction
• Final documents signed
Work flow of a successful Principal Balance Reduction Program
1. Interview to get homeowners side of the story and current situation
2. Education about what is going on in the industry today
3. Collect required documentation
4. Pre-Screen required documentation
5. Evidence of Lender wrongdoing discovered, order full Forensic and Securitization Audits
6. Completed Investigation of Forensic and Securitization Audits
7. Findings of Forensic and Securitization Audits presented to Homeowner and facts explained
8. All options of how to proceed with Negotiating presented to Homeowner for review
9. Homeowner makes an informed decision on which option is best to move forward with
10. Proposal Package prepared, then presented to Lender
11. Solution accepted by all Parties
12. New payments either with the same lender at a new reduced loan amount or possibly a new
loan with a new lender which is determined during the negotiation phase