Principal reduction

A principal reduction is a decrease granted toward the principal owed on a loan, typically a mortgage. A principal reduction can be obtained to decrease the outstanding principal balance on a loan and provide relief for a borrower. Principal reduction is normally deployed to prevent foreclosures on properties, which may be more costly to financial institutions than a reduced principal owed to them. Principal reductions were commonly offered following the 2008 financial crisis to help support distressed borrowers—Read more at Investopedia. Chen, James. “Principal Reduction.” 3 March 2018