Debt Help, Mortgages

Debt Help, Mortgages 
A black and white photo of a house wrecked by mortgage debt.According to the Case Shiller Home Price Index, the average home value in the U.S. has declined around 30% since 2005.  Approximately 1 in 4 homes are now “underwater” which means the amount of the mortgage exceeds the value of the home. 

The decline in home values has led to fewer home buyers.  Further complicating the difficulties in selling real estate is the increasing number of homes that have either been foreclosed upon by the  lender and or the mortgage holder accepted a short sale (where they accept less than what is owed in order for the house to sell).   Both of these situations tend to cause housing prices to drop in the surrounding areas.   It is also much harder to find suitable buyers for your home as a result of stricter credit requirements of mortgage lenders and high unemployment.

If you’re a homeowner and are having trouble making your mortgage payments, you have options:

  1. With Equity– If you have sufficient equity and can sell your home for more than the loan amount and cover your closing costs.  This may be the best option for you to avoid foreclosure and potentially get some cash from the sale.
  2. No (or Negative) Equity– If you owe more than your home is worth and can no longer afford your mortgage payments, generally speaking, you have 4 basic options:

a. Loan Modification– In today’s housing market, many lenders are willing to modify the terms of your loan.  This could include principal reduction, interest rate reduction, modifying the length of the loan and other options.  Check directly with your lender.  Each lender has their own set of qualifying guidelines.  Most lenders will have this information on their websites.

b. Short Sale– A short sale is where you sell your home for less than the loan balance and lender agrees to accept that amount to satisfy the loan and proceed with the sale.

Example: $100,000 Sales Price
$150,000 Loan Amount
$50,000 Difference
Important Note: Some states allow and some types of loans are “recourse” loans.  This means after the home is sold, the lender can pursue you for the difference.  In our example, with a recourse loan, the lender could pursue you for the $50,000 difference by filing a lawsuit against you.  There also may be tax consequences.  While we do not assist with loan modifications (you can do this yourself) we can assist you in negotiating the terms of your short sale and if you are being sued we can defend you against the lawsuit so long as you have a viable or recognized defense to the lawsuit.c. Deed In Lieu of Foreclosure- Homeowner (you) signsthe title of your home over to the lender to avoid foreclosure.  The lender avoids the time expense of foreclosure.  We can assist in negotiating the terms of a Deed In Lieu to help you avoid lender recourse and lawsuits.d. Foreclosure-  A judicial (through a court) process in some states or handled by a trustee sale in other states.  The home is typically sold to the highest bidder.  Each state has its own specific law on how foreclosures are handled.If you’re currently in foreclosure and wish to keep your home, bankruptcy may be an appropriate option for you. Please call us at 800-987-4165 for free, no obligation consultation.If you disposed of your home by Short Sale, Deed In Lieu or Foreclosure you may be subject to or already have a deficiency judgment against you.  If the lender has a deficiency judgment they can enforce the judgment through bank levies, asset seizure or wage garnishment.  We may be able to assist you in either avoiding a deficiency judgment altogether by negotiating a favorable settlement on the judgment.  We do not charge any upfront legal fees for this service.  Our fee is based on the amount we save you off the enrolled balance of the judgment.