Do Upside Down Mortgage Holders Have Another Option Besides Short Sales?
Are there any other options for upside down mortgage holders besides short sales? There answer is now yes. A new program known as a Principal Balance Reduction is being offered to upside down homeowners that meet a few basic qualifications. As long as the mortgage(s) is worth at least 25% more than the value of the property and the applicant can document a debt-to-income ratio of 50% or less (based on the new, lower monthly mortgage payment) the negative equity can be completely eliminated through a Principal Balance Reduction program. A Principal Balance Reduction program is essentially a large scale Note purchase program consisting of heavily upside down homeowners, some current on their payments and others that have already stopped making their mortgage payments. Due to the fact that property owners who owe more than their property is worth are very likely to default in the not so distant future, the Notes are sold to the new buyer (in this case a $5 Billion dollar hedge-fund) at a