Posted by TinaCA on 10/30/10 8:42am
Msg #358938

Principal Reduction

I saw on the HUD principal reduction. I understand it is reducing the principal. Could someone explain it to me?

Reply by Linda_H/FL on 10/30/10 8:52am
Msg #358940

Re: Principal Reduction...couple things I can think of

off the top of my head:

1. Under the program they're in the borrowers may not be allowed to get cash back or be limited in the amount of cash back....if they DO end up with cash out or they're over the limit the excess is put back into the loan and applied to the principal reduction.

2. Loan was taken to reduce the principal of the loan...

Just off the top of my head.

Reply by Ilene C. Seidel on 10/30/10 2:56pm
Msg #358968

In addition to Linda's explanation the amount of the principal reduction (once loan funds) is applied to the principal balance of the new loan. I tell the borrowers when the first statement arrives to make sure the funds were applied. If it's a coupon book to call the mortgage company to confirm the funds were applied.

Reply by Alice/MD on 10/30/10 4:05pm
Msg #358976

I agree with Linda's and Ilene's explanation totally!!