PR - Principal Reduction

The definition of mortgage term: Principal Reduction

Principal reduction is a program offered by Fannie Mae and Freddie Mac
in order to assist qualified borrower with debt relief. Principal
reduction allows a portion, usually no larger than $500 be removed from
the remaining principal of a loan. This is generally used in order to
help prevent foreclosures. In order to qualify for principle reduction a
borrower must be at least 61 days behind of mortgage payments, not
currently be in bankruptcy of legal proceedings, not be engaged in loan
modification, home must be owner occupied, have an income verification
that documents no more than 40% housing costs compared to gross income.

 

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