Comments on: Principal Writedowns Make for Better Loan Modifications–But Nobody Does it http://loanworkout.org/2009/06/principal-writedowns-make-for-better-loan-modifications-but-nobody-does-it/ Loan Modification & Home Loan News Fri, 20 Nov 2009 12:55:43 -0700 http://wordpress.org/?v=2.8.6 hourly 1 By: napamac http://loanworkout.org/2009/06/principal-writedowns-make-for-better-loan-modifications-but-nobody-does-it/#comment-16487 napamac Mon, 31 Aug 2009 03:41:13 +0000 http://loanworkout.org/?p=4657#comment-16487 You have hit on the key issue in this whole real estate mess. Unless lenders/investors reduce the principal balances down to current market, there is absolutely no rational incentive to hang on to a property that is under water (loan to value). Especially when you have lost a good paying job and can only find employment at 50% or less of what you previously made. I was offered a loan mod ... but unless they reduce the principal I would be crazy to be paying on a 560K loan with a property value of 400K. We are still hoping that our government will take our money and helps us . . . before it's too late! You have hit on the key issue in this whole real estate mess.
Unless lenders/investors reduce the principal balances down to current market, there is absolutely no rational incentive to hang on to a property that is under water (loan to value). Especially when you have lost a good paying job and can only find employment at 50% or less of what you previously made.

I was offered a loan mod … but unless they reduce the principal I would be crazy to be paying on a 560K loan with a property value of 400K.

We are still hoping that our government will take our money and helps us . . . before it’s too late!

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