On October 1st, 2010, a new plan was officially implemented. The new PRA or Principal Reduction Alternative guidelines for  loan modifications. What does this mean for you?

Well, if you are struggling to make your mortgage payments and your house is underwater (you owe more than it is worth) you should be getting excited! Under the new Principal Reduction Alternative Guidelines, servicers evaluating certain modifications must do a mark to market loan to value (MTMLTV) ratio on any loan greater than 115 percent. If the loan is applicable, a principal reduction then becomes the next step to reducing your monthly payments to the 31% monthly income cap.

Under the previous guidelines, to make the 31% monthly income cap servicers would reduce the interest rate, extend the loan terms (30 to 40 years) and only use principal reductions as a last resort.

This should dramatically increase the amount of principal reductions for homeowners who are having trouble making their montly mortgage payments. Homeowners must make timely mortgage payments after the  principal reduction alternative program has been completed for them to receive the full benefits of this program.

It is still difficult to obtain any form of a  loan modification for most homeowners on their own. For assistance in getting approved for the principal reduction alternative program, please fill out the form HERE or call the toll free number 888-762-1150.