Homeowners who owe more than their home is worth and need a Citimortgage loan modification may be able to get a loan mod with principal reduction.  However, the bank will only offer this option if certain criteria is met.  Although Citi gets paid to reduce the mortgage balance on qualified loans, they do not offer this option to every borrower who is underwater on their mortgage-only those who meet certain criteria.

How do you get a principal reduction from Citimortgage?  It helps to know the formula that the bank uses to determine your new modification loan terms-once you know how they arrive at these modified terms, you will be able to find out how to improve your shot at a loan mod that includes a lower mortgage balance.  Keep in mind that the reduction may be in the form of deferral or complete forgiveness-each of these options has it’s benefits both short and long term.

The Citimortgage principal reduction option will only be offered if your mortgage balance needs to be lowered in order to achieve the new Target Payment.  This new payment is determined by how you report your monthly budget figures-meaning your INCOME and your EXPENSES are the determining factor.  The goal is to achieve a new payment that is affordable and equals 31% of your reported monthly GROSS income.  IF the only way the bank can reach this payment is by lowering the rate, extending the term AND lowering the loan balance, then you may be offered this type of mod.

However, IF your monthly budget figures do not fit the guidelines and Citimortgage determines that it will be cheaper for them to foreclose than to modify and lower the loan balance, you will be denied.  SO, it is really key to know how to

See Budget Figures

optimize your monthly budget figures on the RMA financial worksheet so that you fit right into the “sweet spot” for modification.  You may need some help to figure this out-so consider using the Loan Mod Calculator-a program designed to compute and display your optimum budget figures.  The Loan Mod Calculator will show you how to fine tune your income and expenses so that you know ahead of time what you  need to report in order to have a better shot at principal reduction.  You can get more tips and information at MyLoanModificationCenter.com

2 Responses

  1. WILLIAM V CARTER Said,

    My spouse and I purchased a single family home in Rockford, IL March 2001 FHA for $119,000 at a fixed FHA rate of 7.5%.

    We received a loan modification in 2009. Our new mortgage went up to 130,000, still FHA and the new interest, fix rate is 4.875%.

    Our home is worth approximately $114,000.00.

    Could this be classified as “underwater property?”

    IF so than what should we do moving forward?

    Posted on May 2nd, 2013 at 9:02 pm

  2. admin Said,

    Yes, it would appear that your loan is Underwater-if you are having trouble making the current mortgage payment then you may be eligible for a loan modification. The new rate could go down as low as 2%, and you could see some of the principal balance reduced as well. You need to contact your lender and tell them that you wish to apply-BUT before you disclose any of your financial information to them, make sure that your monthly budget figures-your Income, Expenses and Assets will pass the approval guidelines. The Loan Mod Calculator will help you with this critical part of the application-it will automatically compute and display a PASS or FAIL for the 5 approval guidelines. Make your adjustments ahead of time-when you see a PASS for all categories-you are ready to complete your application form.
    Visit MyLoanModificationCenter.com for more information and tips-you also receive Free Customer Support as a Kit owner-we will be happy to review your Loan Mod Calculator and give our tips and feedback!

    Posted on May 4th, 2013 at 7:27 am

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