2. 411 on the Principal Reduction Program (PRP) Principal Reductions are way for individuals with mortgages that are very upside down, to bundle their loans through an intermediary, such as Addvent Funding and use that leverage to negotiate directly with the bank to reduce their mortgage to current market value or below. This is not a new loan. This is your loan being sold to a private investment group and then that balance reduced proactively by them to your current market value (CMV). Mortgages are bought and sold quite frequently after the initial closing, this in essence, is the same thing, with a direct benefit to the homeowner by reducing their balance and indirectly lowering their mortgage payment. Your loan, after the reduction, is then rebundled with now performing mortgages and resold back to the same investment groups and mortgage backed securities that bought them in the first place.
3. A new mortgage with a principal balance based off what your home is actually worth You loan is based on prime + 3% (currently 6.25%). The new loan is good for 30 years and is fixed. No limit to loan amount Any occupancy type qualifies There are no closing costs associated with this program. There is no new loan issued, so you do not have to pay the typical closing costs associated with a loan originated at a mortgage company. If you have a 1st/2nd mortgage, you still qualify. Program Explanation Cont.
5. THERE ARE NO CREDIT REQUIREMENTS ! How it Works? After pre-qualification, with your consultant, your file is submitted to our office for review. Upon receipt of your file, we will check to make sure you qualify one additional time and make sure that your house is in fact underwater. Once we determine that you are good to go, your file is then added to a pool of loans from your lender for negotiating. This is where the variation in time comes into play. If you are the first person into a pool, unfortunately, it can take much longer to have your file worked on. If you are the last person into the pool, it will be much quicker. This is why we tell people at least 6 months, closer to 8 and sometimes longer than 12. Unfortunately in today’s ever changing mortgage financial environment, things are not always as easy as they should be. People ask, “why would my bank do this for me”. There are a few reasons: They have to cover the capitalization calls when your loan is re-rated down from an A to anything lower than a B. The lower the rating, the more capitalization they have to have in place. The more loans they have with lower ratings, the more capitalization they have to have on hand. TARP funds were set aside in February of 2009 specifically for publically traded banks to access *IF* they transferred a note from their portfolio to a private investment fund. Whether that be a real estate investment trust, a private investment firm, a hedge fund, etc. Regardless, the banks benefit from freeing up capital and not being forced to have a certain dollar amount of money on hand. It’s then at this point that the negotiation with the current lender to purchase the bulk of the loans is initiated. The people that negotiate these files work and have worked on the secondary market for a long time. They know the ins and outs of how to get groups of portfolios rated and who to go to without having to fumble through a loss mitigation department much like a loan mod. Once your file is negotiated with the rest of the files in it’s pool, a new dollar amount is assessed as to what your home is worth. It is based on the then current market value, not today’s. You will have a new note issued to you and serviced by our servicers for 30-120 days, at which point, your loan will be re-packaged and sold back on the same secondary market that sold your loan to us in the first place.
6. Current Mortgage Balance = $400,000 Current Payment @ 6.25% = $2462.87 Current Home Value = $250,000 New Mortgage Balance = $250,000 (Based on Current Market Value) New Payment @ 6.25% = $1385.36 Savings of $1077.51 a month!!!! Example
13. Q: If I’ve ever had a BK discharged or had another house foreclosed on, will I still qualify? A: YES!! Q: If I am currently unemployed, will I qualify. A: Unfortunately no. However, if you are married to someone that is employed, we can get their name added to the new loan. Q: Why are only some of fees refundable? A: There is sizable expense involved in getting this file submitted. Parts of the total fee are used to cover any and all third party expenses needed to secure your new loan. You will not be billed for anything above and beyond.
14. Q: What if something happens to me that affects my ability to qualify for the new loan? A: If for any reason during the process you are unable to qualify for the new loan, your commitment fee would be refunded. Q: What is the interest rate associated with my new loan. A: Your new rate is based off of Prime +3% (currently 6.25%) at the time of issuance. If Prime changes during the process (good or bad), you will receive a note based on that.