There is large debate among experts about whether reducing principal will cause more or less default among borrowers. Those against it believe it will force banks into a much tighter lending practice because they have to offer price protection to borrowers. In support of this, data shows there is no reduction in re-default rates among those who are delinquent in their payments and are given a payment reduction and those who were also offered smaller mortgages. A little less than half of those who were given lower mortgage payments re-defaulted within a year. And this number remained the same no matter if the borrowers had equity or not in their home...

Landlords who invested in income producing properties before the bottom fell out of the real estate market may qualify for assistance through the HAMP government program. Under the Obama administration, this program will help investors who bought multiple properties that they intended to rent out or currently have rented out. The Landlords can qualify for up to four federally subsidized loan workouts starting in May. The program will work by paying banks to work out the current loans it has with these investors by reducing monthly payments and interest rates, or extending the repayment time and forgiving principal...

When you decide that a loan modification is your best option, you should be prepared for these issues if you plan on dealing directly with your lender instead of hiring an attorney to do it for you. Most lenders only allow one loan modification attempt a year, so it is important to be prepared for what lies ahead...

If you are attempting a loan modification, you should take note of these tips to ensure the best result possible for you and your home...