Loan modifications are done through the interest rates be lowered, extending the repayment period, adjusting the principal amount and partial forgiveness of accrued penalties
Reduction of the principal amount
This involves the principle amount to be reduced and is the most difficult to negotiate and using loan modifications experts to help in this matter will assist in getting the application approved. As a rule, the banks will not do it but there are exceptions where if the loan amount exceeds 115% of the current market value they can consider lowering the principal amount. If you are not sure you can always ask a loan modification lawyer to check if you qualify.
Most lenders will consider this option when loan modifications are considered and especially if your repayments are higher than 31% of your monthly income. It is important to note that even though the interest rates are lowered they will be increased after a certain period by 1% per annum also for a certain amount of years.
Rather than negotiating the accrued penalties as separate items, it might be easier to negotiate a reduced loan amount which will include everything. It is very difficult for the lenders to let you off paying the penalties or even reducing them but by incorporating them into the overall loan they simply disappear. There are loan modification consultants that know all the procedures and what lenders are prepared to do and how best to get the best deal for you.
Negotiating with the lenders needs experience and using loan modification companies such as Loan Modification Depot have the consultants that can negotiate successfully because they have the past experience of what is accepted by lenders when modifying loans.