Principal Balance Reductions On Mortgages: The Reality

Property values are down, and there’s no telling when the declining real estate market might finally start to rebound. For Florida homeowners facing foreclosure the same question always comes to mind: "since we owe so much more than this house is worth, won’t the bank reduce the balance on our loan"

The short answer is: probably not.

So why all the hype on the Florida news and radio?

Well, principal balance reductions are kind of like plane crashes. They make the headlines because they’re so very, very rare.

Florida foreclosures are still high, and Florida property values continue to stay low. A qualified bankruptcy and foreclosure attorney with experience in Florida can help homeowners that are upside down best determine what their options are. But one thing no individual can guarantee a distressed family facing foreclosure is a reduction in the amount owed on their mortgage. So beware any attorney, law firm, modification service, debt settlement company or other counselor that promises such fantastic results. If it sounds too good to be true, it probably is.

There are several reasons why your bank will likely not reduce the amount you owe on your loan. For one, there is a promissory note that you signed guaranteeing repayment of the money you borrowed. And of course, every bank has investors and shareholders expecting the bank to make a profit. There’s almost no incentive for the bank to reduce the principal balance of your mortgage.

If you’re a homeowner facing foreclosure, considering bankruptcy, or simply behind on your burdensome mortgage, the best thing to do is seek the advice of a qualified Florida bankruptcy and foreclosure attorney. An experienced bankruptcy attorney can explain all your options, guide you through the confusing and stressful process of obtaining relief from the high mortgage and low property value on your home, and you can begin rebounding financially even before this real estate market does!