Recast is a little-known, seldom-used tool in the mortgage world. But recast mortgages could be just-the-right answer to attracting more big-name servicers to the Principal Reduction Program – and helping more homeowners.
Now, many servicers — including Bank of America and Wells Fargo – offer to recast mortgages, but the practice is seldom used. Instead, loan modifications and refinancing often take center stage.
But recast offers a no-muss, no-fuss solution for homeowners, servicers and Keep Your Home California. The state-managed mortgage assistance program will begin recasting mortgages within the next several weeks after U.S. Treasury officials approved the plan in mid-July.
A recast allows a large chunk of money to lower mortgage principal without affecting the interest rate or the length of the loan. For example, if you owe $300,000 on your current mortgage and Keep Your Home California approves $75,000 to lower your principal, then your current monthly payments…
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