Following are the answers to the most commonly asked questions about our Principal Reduction Litigation Strategy (“PRLS”). Specific questions about your particular loan are covered in your initial consultation with one of our representatives. Q: What is Principal Reduction Litigation ("PRL")? A: Many homeowners are dealing with the unprecedented decline in property values caused by the collapse of the housing bubble.It has burdened many people with a staggering level of negative equity. Many households are facing a "can't pay, can't sell, & can't refi" scenario.In most cases, a Loan Servicer is working directly against your best interests. Did you know, the Loan Servicer wants to see your loan balance go up so they can make more money (A Loan Servicer makes about ¼ to ½ percent on your loan … so the larger your mortgage balance becomes, the more they make)?
Our PRL Strategy forces your lender to the negotiating table, and the Loan Servicer cannot profit nor control the outcome because we actually litigate in court. We bypass the Loan Servicer completely and negotiate directly with the bank! A lender that would ordinarily be nonresponsive to the needs of a borrower will suddenly become very proactive when facing legal action. Under the umbrella of court protection, all parties involved are able to sensibly tackle the serious problem of negative equity. Upon reaching a successful settlement you’ll see a reduction in your loan balance, interest rate, and/or a lower mortgage payment. Q: Why Won't My Loan Servicer Help Me? A: You should know something about who you're making payments too ... Once a mortgage loan is made, in most cases the original lender does not have any further contact with the homeowner. Instead, a Loan Servicer is hired to collect monthly payments, and given full authority to manage your loan - including the authority to modify or foreclose on a loan.
However, Loan Servicers don’t have enough financial incentive to modify mortgages. A Loan Servicer makes about ¼ to ½ percent on the principal balance of your loan … so the larger your mortgage balance becomes, the more they make! In most cases, a Loan Servicer is working directly against the interests of the borrower.The Loan Servicer wants to see your loan balance go up, and you’re already buried under a mountain of negative equity.
Here's what the Loan Servicer doesn't want you to know: Unlike the actual investor or homeowner, the Loan Servicer makes money on a foreclosure, but a loan modification actually costs the Loan Servicer. A Loan Servicer never loses any money from a foreclosure because they recover all of their expenses, including their very profitable junk fees, when a loan is foreclosed.The Loan Servicer will even get paid before the original lender sees a dime. On the rare occasion that a loan modification is approved the Servicer typically avoids authorizing a principal reduction. The usual routine involves adjusting the interest rate, payment terms, and monthly payment, but the most important aspect of any long-term loan modification should be a principal reduction. Why does this happen? The Loan Servicer charges a monthly servicing fee (a fixed percentage of the unpaid principal balance of the loan). A Loan Service has no interest in lower your principal balance (The larger your loan balance the greater their profit from fees). In fact, these fees give servicers an incentive to increase the loan principal by adding delinquent amounts and junk fees.Loan services are economically incentivized to foreclose on you. The end investor who ultimately funded your loan and who has an economic interest in helping you succeed as a homeowner, and the Credit Default Swap investor that is on the hook if you default are not permitted to directly participate in the management or servicing of your loan.These parties are a hostage to the system just like you, and are powerless to push the loan servicer to modify a loan or work out an arrangement by which a family can stay in their home.
With our Principal Reduction Litigation Strategy we remove the influence of the Loan Servicer and deal directly with the actual end investor to reach an equitable resolution.
Q: Can I do this myself? A: Everyone has the right to represent themselves; however, consider the likelihood of a successful outcome without experienced legal representation?In a lawsuit of this nature, the bank cannot afford to let you win.It would set precedence and encourage other homeowners to defend themselves in a similar fashion.It would become the proverbial snowball effect.Your lender is a multi-billion dollar corporation with a private army of lawyers that represent the bank exclusively. Without proper legal representation you become an easy mark for the bank's army of lawyers. We understand how to negotiate for deep discounts with banks holding 'toxic assets'. We can provide the proper guidance that will result in lowering your loan balance and make your mortgage payment smaller. We can save you time, energy, money, and most importantly ... fix your negative equity problem! Q: Why should I pay someone else to do it for me? A: The cost to litigate this type of lawsuit requires a sizable investment, and would be more expensive than the value of a single homeowner's loan.This is the very thing your lender is counting on to prevent you from defending your property rights.Most people cannot afford the time, energy, or expense that is required to see it through to the end.The bank knows how to play this game very well. When you participate in our Principal Reduction Litigation Strategy (PRLS) you are effectively equalizing the terms of engagement.Approaching the bank as a member of an aggregate lawsuit magnifies the intensity of potential loss for the lender ... and makes protecting your property rights more affordable at the same time.The bank is forced to take your complaint seriously, and highly motivated to negotiate a settlement before precedence can be set. Q: What is a Forensic Loan Audit? A: A Forensic Loan Audit (“Loan Audit”) is a detailed investigation of your loan documents. A Loan Audit is used to discover lender violations in the Truth in Lending Act (“TILA”), the Real Estate Settlement Procedures Act (“RESPA”), the Home Ownership and Equity Protection Act (“HOEPA”), Equal Credit Opportunity Act (ECOA), is compliant with Section 32 of Regulation “Z”, and checks for violations in state and federal anti-predatory lending laws.Typical predatory loans will have high interest rates, balloon payments, prepayment penalties, adjustable rates, and a host of other problems.Predatory lending violations ran rampant through the mortgage boom. Industry insiders estimate that over 88% of Loans originated between 2001 and 2008 had either RESPA or TILA violations. Antit-Predatory lending laws are taken very seriously by our judicial system. Q: What is a Certified BPO? A: A Certified Broker Price Opinion (“BPO”) is a determination of property value, and is performed by a Certified Residential Appraiser licensed as a real estate broker. This type of BPO carries the added weight of being performed by a knowledgeable well trained appraisal professional who is also a licensed real estate broker. In order to become a Certified Residential Appraiser the applicant must meet the following examination, education, and experience requirements:
Two hundred (200) classroom hours, which may include the ninety classroom hours required for the Licensed Real Property Appraiser Classification, of courses in subjects related to real estate appraisal which shall include 15 classroom hours relative to the USPAP.
Successful completion of the Appraiser Qualifications Board endorsed Uniform State Certified Residential Real Property Appraiser Examination or its equivalent.
2,500 hours of appraisal experience during no fewer than 24 months is required. If requested, experience documentation in the form of reports or file memoranda should be available to support the experience claimed. Hours may be treated as cumulative in order to achieve the necessary 2,500 hours of appraisal experience.
College-level requirements: Associate degree or higher. In lieu of the required degree, 21 semester credit hours covering the following subject matter courses: English Composition; Principles of Economics (Micro or Macro); Finance; Algebra, Geometry or higher mathematics; Statistics; Computer Science; and Business or Real Estate Law.
In order to become a Licensed Real Estate Broker, the applicant must meet the following examination, education, and experience requirements:
Complete 90 hours of pre-licensing education and pass the examination at an approved real estate school, college or university.
Have at least 3 years of actual experience as a salesperson or broker during the 5 years preceding your application.
Must attend a broker management clinic.
Q: What kind of loans qualify for PRLS? A: Any type of loan, including non-owner occupied rental properties, qualify for a principal reduction. We are experts in all of them. This includes: ARM, 80/20, HELOC, FHA, OO, NOO, Rural Administration, VA, SFR, SH, Freddie Mac, Fannie Mae, Conventional, 1st & 2nd combo loans, Primary Residence, 2nd Homes, Luxury, Townhomes, Investment Properties, mobile homes, Co-op’s, commercial property, and undeveloped land. Q: I am current on my mortgage, will my bank give me a principal reduction? A: Yes. Even though you pay your mortgage on-time, if your property is worth less than what you owe your mortgage is classified as an underperforming or distressed loan on the balance sheet of the bank. For example, if you owe $200,000 on your loan, but the fair market value of your home is only $150,000 then your home is buried under $50,000 of negative equity. The bank’s balance sheet will report your home as an asset worth a negative -$50,000, and the bank will be required to increase its capital reserves.
Banks are compelled to negotiate a principal reduction on loans that are tied to properties worth less than the loan value. The bank is required to downgrade the rating of these loans, and is required to keep more capital on hand to insure against default.Unfortunately, enforcement of these rules has been largely compromised by government regulators.
Our PRLS forces the bank to deal with the same problem you’re dealing with … the negative equity in your home.Our PRLS can bring your lender to the negotiating table to reach an equitable resolution to the negative equity you’ve been dealing with since the housing bubble collapse.
Q: I applied for a loan modification, but my bank turned me down, is there still a solutions? A: Yes, PRLS can work even when your bank has refused to approve your request for a loan modification. Unlike a loan modification, the bank isn’t in control when facing litigation in a court proceeding.The bank must obey the procedural rules like everyone else, or face court sanctions up to and including a default judgment.
In a loan modification your lender is in 100% control of the process.You’re literally at their mercy, and the bank takes full advantage of this fact by requiring mountains of unnecessary documentation.By the way, the single most important part of any realistic loan modification is a principal reduction, and it never comes up when discussing a loan modification controlled by your lender. Join the fight to protect your property rights!When you participate in our PRLS you are literally forcing the bank to offer meaningful solutions, including a principal reduction, that will translate into long term financial help. Q: How long does it take to complete the PRLS process? A:This is one of the most common questions asked about filing a legal action in court.It should also be remembered that banks often do not negotiate in good faith prior to a claim being filed. Most Lenders simply will not make a reasonable offer if they have not been sued. Although many lawsuits are scheduled for trial quickly, a civil trial do not have to be set for trial until between 18-24 months after filing. Accordingly, the proverbial clock does not begin until a lawsuit is filed.The question then becomes: Q: When is the best time to attempt to settle the claim? A: The answer is actually simpler than one might expect: as soon as you are aware of a reliable estimate of the total damages incurred in a case. However, when this actually is varies greatly based upon the circumstances of each case. After a lawsuit is filed, the bank may reevaluate its position and want to settle the claim at that point. If this is the case, the bank may ask to delay proceeding with litigation and negotiate a resolution. This can be good, as the clock is already ticking, but at least the bank knows that our clients are serious and willing to litigate the matter if necessary.
On the other hand, a lawsuit may proceed and a case will not be resolved until after the discover process. This is the phase of the lawsuit where each side obtains all relevant information from the other so that each has all necessary information regarding the claim. If a case is to be litigated, it generally is not settled until 12 to 18 months on average from the date of filing.
Q: How can I be sure this will help? A: PRLS puts your lender on notice about its RESPA and TILA violations, brings to light banker’s predatory lending practices, and forces the bank to correct the chain of title and securitization issues.Keep in mind that your bank cannot afford legal precedence to be set in your favor by losing a court case.Although your bank is not required to settle, and we cannot guarantee a specific outcome because of the uncertain nature of any lawsuit, the objective of our Principal Reduction Litigation Strategy is to force your lender to the negotiating table to reach an equitable settlement which includes a meaningful principal reduction. Q: If I’ve ever had a Bankruptcy or had a foreclosure, will I still qualify? A: Yes, our program is NOT credit driven. There is never any credit requirements to qualify for this program. Our program is not an offer for a new mortgage. You are not applying for a new mortgage. You are simply participating in a mortgage pool that will be discounted on the secondary mortgage market.
Q: I have terrible credit. Should I even try? A: Yes, our program is NOT credit driven. There is never any credit requirements to qualify for this program.
Q: What is the difference between a short sale and principal reduction? A: A short sale is when a lender agrees to take less than what is owed on a mortgage note; however, a short sale can leave your credit score in shambles and the bank can pursue a deficiency judgment against you for the difference that was left unpaid from the short sale. The Principal Reduction Program does NOT affect your credit score and permanently lowers you loan balance to current market values, lowers your mortgage payment in most cases, and reduces your negative equity problem.
Q:How does a Principal Reduction differ from a loan modification? A: The loan modification is controlled by the Loan Servicer, and consists of four parts that can be modified in order to help the borrower get through tough times. These include adjusting the interest rate, changing the term, changing the payment, and even changing the balance owed on the loan. The purpose of the loan modification is to temporarily provide relief to the borrower until he/she can get back on their feet. The two (2) key element of a loan modification is that it’s only meant to be temporary and it’s absolutely controlled by the Loan Servicer. In reality a Loan Servicer will almost never lower the principal balance because this is the main source of revenue for the Servicer. The higher the loan balance the larger the junk fees the Loan Services is allowed to collect.
The Principal ReductionLitigation Strategy can also include the four elements contained in a loan modification. These include adjusting the interest rate, term, payment and loan balance. The main difference is that our Principal Reduction is NOT temporary, and the Loan Servicer cannot profit nor control the outcome because we actually litigate in court. We bypass the Loan Servicer completely and negotiate directly with the bank. The Loan Reduction we secure is permanent.
Q:If I am pursuing a loan modification, can I still do this? A: Yes. The bank’s loss mitigation department is responsible for handling all loan modifications. Since we do not offer a loan modification or foreclosure prevention service we never deal with the loss mitigation department. The PRLS takes place under the supervision of the court. In fact, your bank's loss mitigation department probably won't even know that you're concurrently working on a principal reduction at the same time.
Q:Are there any limits to the maximum loan amount? A: Absolutely not. Whether you have a $150k mortgage or a $2,500,000 mortgage, we can still help.
Q:If I have more than one loan on my property, (1st/2nd), will I qualify still? A: Yes!
Q: Do I have to live in the property that I am putting into the program? A: No. You can do a second home or an investment property.
Q: Can I still get in your program if I’m in credit counseling or working with a debt management company? A: Yes, our Principal Reduction Program is not credit driven, and could actually help you achieve your credit counseling goals!
*Disclosure: Royo Legalese, LLC (“ROYO”) is not an attorney or law firm and does NOT offer legal advice or legal representations. Royo does not guarantee nor predict any outcome and/or result, The results shown, if any, are not indicative of a result that you may receive. By using this website you are agreeing to the Royo Terms of Use and Privacy Policy and the Royo Disclosure Statement.
