Yielding from pressure from the Obama administration, banks are escalating the number of modified mortgages which include principal reductions. Recent government data show that the number of second quarter modifications that reduced principal more than doubled from first quarter. The report reveals that 1 out of 10 modified loans involved reduced principal.

This is welcome news to struggling homeowners as serious delinquencies continue to rise. If you need help consolidating payday loans into one payment you can get a free quote through services which are available.

Banks and loan servicers modify loans in several ways including:
reducing interest rates;
extending the term of the mortgage;
defer payments for several months;
writing off a portion of the loan.

Similarly, payday loan debt can be settled and consolidated through other available servicing companies. Their service agents can quickly calculate your potential savings.

Many Loan Modifications Fail
Obama"s "Making Home Affordable" plan includes financial incentives for mortgage servicing firms that modify loans. This offsets a portion of the losses the banks face when modifying the loans. In other words, your tax dollars are being paid out to banks as a bounty for lowering the payments of borrowers at risk of foreclosure.

Of all mortgage loans modified in this year's first quarter, 28% were in default again within three months, the OCC said. Among those modified in last year's second quarter, 56% were in default again a year later. This drop is partially attributed to the rise of principal reduction as an element in banks' loan modification plans.

In addition, the Obama administration is placing final touches on committing as much as $35 billion to help struggling state and local housing agencies (HFAs) provide mortgages to low and moderate income families. Having as little debt as possible is a key factor in qualifying for a mortgage.

Housing Finance Agencies are critical to many first time and low income home buyers, who can get lower rate mortgages through an HFA than they could at a bank or other mortgage company. Rates can be half to one percentage point lower than commercial lenders.

Programs that HFAs may have in place include down payment assistance for:
building a new home;
buying a home that has never been occupied;
closing cost assistance;
debt forgiveness;
home rehabilitation funds.

Although each state has different rules, in general to qualify for an HFA loan, borrowers must have:
certain income levels;
good credit scores;
verifiable income.

The quickest way to find your local HFA office is online. A simple search of the internet can be conducted for your state or county housing finance agency.