Difficult to Obtain
Unlike other Making Home Affordable programs like HAMP that mainly attempts to lower the monthly payment; the goal of modifying the loan in the Principal Reduction Alternative program is to reduce the principal owed. We help our customers apply for the principal reduction, any HAMP eligible homeowner whose mortgage is not owned by Fannie Mae or Freddie Mac may be able to lower their mortgage’s total amount owed. The eligibility requirements are as below.
- Your mortgage is currently a minimum of 115% loan-to-value ratio.
- You live in your home as a primary residence.
- Your home loan was taken out on or before January 1, 2009.
- Your monthly house payment is more than 31% of your pre-tax income.
- Your first mortgage loan is no more than $729,750.
- You are currently delinquent on your mortgage payments or are in danger of delinquency and have a financial hardship.
- You can prove sufficient income to support the modified monthly payment.
- In the last ten years you have not been convicted of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with mortgages or real estate transactions.
*Eligibility criteria are presented strictly for guidance. Contact us so we can assess if you qualify for PRA
There is an impact on your income tax any time you take advantage of a loan modification. The IRS released guidance on PRA earlier this year. Typically the banks are not fond of the Principal Reduction Alternative program and many of our clients will choose to take advantage of a short sale or loan modification if they are unable to take advantage of PRA.