How can i write a Legal letter asking for principle balance reduction?

Answer 1

Write the letter in normal business format. There is no form letter because everyone's situation is different. Here is a list of do's and don'ts: DO: Briefly outline your hardship, the causes and the expected duration (temporary hardships are not likely to result in balance reductions). Explain what you have done to help yourself and how you think the reduction will be the only way to save the home. Include a budget plan that shows enough money left every month after the reduction that you can live, but not live with significant excess. DONT: Harp on your situation or go for the sympathy angle. They've heard it all. Also, don't expect to be successful. As harsh as this may sound you must look at it from the lender's perspective. You are asking them to pay you a large sum of money in the form of forgiven debt. Not only do they loose the money, but they must account for it and the lost interest on that money when they do their accounting. Plus, you are still the borrower and you just proved to be a poor credit risk. In foreclosures or short sales, they wash their hands of the whole thing. The largest obstacle is the size of the lender and the size of their problems. Many large lenders have issued a matrix that tells overworked and underempowered employees how to handle each problem mortgage loan and this does not usually include balance reductions. I have seen lenders foreclose on homes, spend thousands repairing damage from departing owners and then sell them for pennies on the dollar at auctions when all the homeowner wanted was a partial balance reduction that would have been much cheaper for the lender.