[missy s]

...modify my house loan? We bought it for 150K more than it's worth? We aren't late on our payments, and we can afford to pay the high mortgage for now. But I'm wondering, can I modify my loan and reduce my principle if we owe almost double what it's worth? We bought for 395K and two other homes on our street-same model- went for 250K or less. We owe about 295K on it.

[Komaraconsulting]

Some lenders will want the borrowers to be past due in order to apply for a modification. The public has an incorrect preception of principal reduction. It is very rare for the bank to reduce and forgive the principal. Some banks will do whats called a principal forberence. This is when they lower the principle but dont forgive it. They collect the reduced amount when you go to sell your house. If you have a high credit score (740 and above) you can apply for a short refinance. This is also very rarely approved. Best thing to do is to apply and see what you do qualify for and what the bank is willing to work with you on. Guidlines may change if market continues to fall but the banks want to weather the storm as long as they can and hope values will come back.

[JohnLG]

You have to be able to prove a hardship to be approved for a loan modification. They will expect you to write a hardship letter and have to show it financially.