Filipino Homeowners Get Principal Reduction Relief
By Henni Espinosa, ABS-CBN North America Bureau
June 8, 2011
UNION CITY, Calif. – Amy and Peter Asi, who lost both their jobs in 2009, almost gave up on their home. For two years, they had asked their lender, Wachovia, to modify their loan and lower their home’s principal.
They hired the help of Attorney Timothy McCandless. Eventually, the amount of the Asi’s principal loan was reduced by 29%. Their lender cut more than $117,000 off their debt.
Peter said they can now breathe a huge sigh of relief. He said, “We’re already struggling to pay for this house, which is underwater. This is a big help.”
Atty. McCandless said since the Obama administration has put pressure on lenders to reduce the principals of struggling homeowners, lenders have been receptive…because they see how it will benefit them, as opposed to foreclosing on homes.
McCandless said, “If they put all these hours on the market all at once — values are going to go down faster and further. It’s in their best interest to work with the homeowners rather than foreclosing, evicting. It’s very destrucive to the community.”
McCandless said a third of the the homes in America are now underwater in value. He said lenders now see principal reduction as a win-win situation.
He said, “They look at the appraised value and the cost it’s going to take to liquidate the home — versus working with the homeowner. Values continue to drop and it’s making more and more sense for banks to work with the homeowners.”
McCandless said principal reduction is a more viable option for struggling homeowners than loan modification…because homeowners are encouraged to pay on time when they know their homes have value.
At its peak, the Asi’s home was valued at $600,000. It is now down to $400,000.
Now that the bank reduced the amount of their loan to reflect current values, they said they’re more encouraged to pay…especially now that they have full-time jobs.
Amy said, “Without principal reduction, you feel like there’s no sense in paying. But with it, homeowners feel motivated to pay.”
Not only was their principal reduced, the Asi’s loan was permanently modified from $4,000 a month to $2,800 a month.
The Asi’s principal reduction has a condition. They have to pay monthly payments on time for the next three years — before the $177,000 can be fully taken out of their loan — not a problem for these homeowners who are now confident in the value of their home.
You may contact Henni Espinosa at firstname.lastname@example.org for more information.
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