Lenders are reducing principal?
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Lenders have been quietly offering unrequested loan modifications or principal reductions on adjustable rate mortgages (ARMs) to borrowers who are not in default, according to the New York Times.
JP Morgan Chase (Chase) and Bank of America (BofA), who both inherited a sizeable portfolio of ARMs from lenders they bought during the housing crash, have determined certain borrowers to be at special risk of default. Their solution is to take steps necessary to keep those defaults from happening.
Many homeowners have reacted negatively to their solicitation for fear of a scam. Principal reduction is so rare that Federal Reserve (Fed) economists reported in March 2011 that they “could find no evidence that any lender was actually reducing principal” on mortgages.
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About The Author
ft Editorial Staff
is the writing staff comprised of legal editor Fred Crane, In-House Broker Consultant Fernando Nunez and writer-editors Connor P. Wallmark, Giang Hoang-Burdette, Jeffery Marino, Carrie B. Reyes, Sarah Cantino, Matthew Taylor and Matthew Shade.
