Underwater Mortgages

Walking Away from a Mortgage

Do you owe more than your house is worth on the real estate market? You are not alone. According to a July 2012 report from Lender Processing Services stated that at that time nearly one quarter of all home mortgages nationwide are underwater. Having an upside-down home loan is especially common among those who are already in default on their mortgages, at 57.6 percent, while 68.3 percent of those who are already in foreclosure are underwater. Not everyone who owes more than their home is worth is on the path to foreclosure - nearly one in five homeowners who are still current on their mortgages are also underwater - but according to these statistics the two conditions go hand-in-hand. If you find yourself in this situation, there is a high likelihood that you are in need of a solution to get out of the loan and to protect your long-term financial health and stability.

Being underwater on a mortgage can make you feel trapped in your home. You might wish that you could walk away, but given that you owe so much and most likely do not have the additional resources to pay off the loan balance, you seem to have no other opportunity than to simply stay put and continue pouring a large share of your monthly income into meeting your monthly mortgage payments. Even if you were able to find a buyer for a price that is within the range of the amount you owe the bank, you would still have to find a way to pay for the difference between the purchase price and the amount you still owe. Most people buy real estate with the goal of either remaining for the rest of their lives or of selling for a profit - not having to find a way to come up with tens of thousands of dollars merely to pay to get out of the property.

Solution to an Upside-Down Mortgage

If your home mortgage is currently upside down and you want to find a way to avoid foreclosure and make a fresh start, your best option may be to hire a Chicago foreclosure defense attorney from Whiteman Borden, LLC for help in negotiating a short sale with the bank. We may be able to convince the lender to allow you to sell the property at fair market value, while also protecting you from being forced to pay the loan balance. This is done through obtaining a waiver of deficiency, by which the bank forgives you the balance of the loan. A short sale will still have a negative impact on your credit score, but in many cases this is not as great as the ramifications of a foreclosure.

An alternative to this approach is to approach the lender with an offer to carry out a deed in lieu of foreclosure, in which the bank agrees to simply accept the deed to the property in order to satisfy the balance of the loan. To learn more about these options and find out which course of action is best suited for your individual situation, contact us now for a free case evaluation. We understand that this may be an intensely stressful and confusing situation for you, and we want to provide you with the help and guidance you need.