LAS VEGAS -- Federal mortgage companies Fannie Mae and Freddie Mac are re-evaluating their long-held resistance to home loan principal reduction. While a decision has not been made yet, federal officials may begin cutting the amount owed on some people's home loans significantly.
That's already happened to one Las Vegas family who had the amount they owe to Bank of America cut in half. B of A says it's part of the controversial nationwide foreclosure settlement.
The I-Team has reached out to some of Las Vegas' leading foreclosure attorneys to see if homeowners can expect to see more of these kinds of offers.
For the Lopez family, the letter they received from Bank of America is like winning the lottery. As part of the nationwide foreclosure settlement, the bank is reducing the principal they owe on their Peccole Ranch home. It was reduced by $198,000. That means the Lopez's crushing adjustable rate mortgage payments went from $2,600 to a fixed rate of $1,200 a month.
"To see the letter and to know that we get to keep our family together. It was a great feeling," said Henry Lopez.
"This is our foundation. This is our foundation for where my kids and my grandchildren come. They come to our house. We have our barbecues. We're together," said Bonnie Lopez.
The house is a home to seven Lopez family members. They patiently waited for the house to be built in 1999. When the recession hit, the family's auto painting business crashed.
"I went from $85,000 a year down to $40,000," Henry Lopez said.
The Lopez's were turned down for federal refinancing programs five times and attempted foreclosure mediation. When the B of A letter came to their door in late March, Bonnie Lopez feared they were being told to leave their home.
"When I walked through the door, I thought, that's it. Do we just start packing?"
Instead, they received a principal reduction that even surprised their attorney. Martin Longabaugh represents the family and says he can't pinpoint they bank picked them over other homeowners.
"I wish I knew. Maybe they just got to the top of the stack, maybe the timing was perfect. It's the first one of these I've seen. We've had some principal reductions before, but this is by far the largest one that we've gotten and it's the first one that says its attributable to the Attorney General's settlement," foreclosure attorney Marvin Longabaugh said.
Longabaugh's says his best advice for Nevada homeowners is to fight through the entire mediation process and fill out mortgage paperwork immediately.
"Don't give up. Fight it all the way to the end," said Henry Lopez.
The Lopez family is currently in a three month trial period where they must make their house payments on time or the deal will be terminated.
The I-Team reached out to Bank of America to find out how many more principal reductions they plan for Nevada. That information will be added as soon as we get it.
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