Are servicers required to offer permanent principal reductions?
No. At their option, servicers may forgive principal to achieve the affordability target of 31% front-end DTI. The program will reimburse servicers for a portion of the cost of a principal reduction, up to the amount the program would have reimbursed if the servicer or investor had used an interest rate reduction to help the borrower achieve an affordable payment of 31% front-end DTI.
