Upside Down Mortgage

Archive for April, 2007

upside down mortgage walk away

Question: What should I do about my upside down mortgage?

I'm 66. My mortgage is 362,000, home value 262,000. I have 120,000 in bank. Trying to pay 1.000 extra a month on principle. It is an option loan and resets each month. With Social Security and work I make about 3,000-4,000 a month. My fantasy is to wait for prices to drop further, buy something with cash and rent or walk away from the current mortgage. However, I want to do the "right" thing. I feel better that way. I have thought of plunking the 120,000 on the mortgage (my wife says no) and hope that I can continue to pay the extra principle each month, hoping to pay down the mortgage before I die. (At this age one thinks about doing things before dying).Any suggestions? Should I continue attempting to pay extra on the principle? Just pay the interest and wait? My wife says just pay the interest. Spend my 120,000 savings? What would be the "prudent" thing to do? Thanks for your thoughts!

Answer: You are 66 years old... any money you have in the bank should stay there and be used for your retirement.

I am going to get flagged for this... but in your case the only prudent thing to do is to walk away from this upside down property that you will never be able to pay off with an option loan that will reset over and over again... in other words... follow your fantasy.

Wait another year... and see whether you can't find a property that you can buy outright with your savings. If you can accomplish this then the only hurdle is to protect the new property from being taken to pay off the other property. For this get some decent legal advise before you make your move.

The savings should stay where they are because you do deserve to retire one day, don't you?

Mortgage Meltdown: The Risks of Walking Away

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Loan Modification Florida Inc

This Plan was developed to help struggling home owners restructure their mortgage, which would reduce the foreclosure rates and Keep home owners in their homes and would also slow the decline in home values.  The Obama Loan Modification Plan has about $75 billion allocated to accomplish this task of making bad loans good and should help about 4 million home owners to save their home’s from foreclosure. 

In the first quarter of 2008, over 50% of loan modifications that were done has failed within the first 6 months and these home owners were again facing foreclosure; the main reason for this is because they were put into unaffordable loan modifications.  The Obama Loan Modification Plan was developed to make a change in the loan modification arena, which would make sure home owners that qualify would be put into an affordable loan modification.

 The plan is centered around affordable payments for home owners, as they believe that homeowners will stay in their homes if they have an affordable mortgage, despite declining real estate property values.  Majority of home owners that end up into foreclosure is because they can’t Afford the payments anymore, whether it’s because they got into a loan they couldn’t afford in the first place or life events such as job loss, death in the family or illness.

In order to make the payments affordable, lenders that are participating in this program are required to reduce the home owner’s mortgage payment to 38 percent of their gross monthly income otherwise know as their debt to income ratio or DTI.  From there the government would make financial contributions to bring the 38 % DTI to 31 %.  To accomplish this goal, the lender or servicer will first reduce the rate as low as 2 %, if they are not at the 31% DTI mark, then they will further extend the terms or amortization of the loan from a 30 year mortgage to a 40 year mortgage.  One of the main disadvantages of this plan is that it doesn’t have any provisions that would require the lender or servicer to reduce the balance of the loan, which would have been a great incentive for home owners to stay in their homes, especially in states like Florida, Arizona and California.  Because for some home owners that have seen the value of their homes dropped up to 50% of what it was worth a few years ago, then an affordable payment make not be enough to motivate them to stay in their homes and instead they will either walk away and lose the home to foreclosure or do a short sale and move on with their lives.

The Obama Loan Modification Plan has a 3 month Trial period, if they payments are made on time for the first 3 months then the modification will become permanent and the rate and terms will be fixed for 5 years.  Then lender will be paid $1000 for each loan modification and up to an additional $3000 over a period of 3 years as long as the home owner continues to make their payments.  Home owners also get a cash incentive where they will get up to $1000 reduction in their principal balance for up to 5 years as long as they make timely mortgage payments.

It is important to note that the Obama Loan Modification Plan was developed for individuals that have primary residences and don’t apply to investor or speculators that bought investment property in hopes to flip for a quick profit.

About the Author:

Marlon Baugh is a nationally-known mortgage expert. Since 2003, he has specialized in Florida FHA Mortgage Loans for people with Bankruptcies, Foreclosure or with other credit issues, as well as Florida Loss Mitigation. If you would like a Free Copy or to get instant access to the remainder of this Insider Mortgage Report, please visit

http://specializedfinancialsolutions.com/lendersexposed.htm or Call 954-678-5796

Article Source: ArticlesBase.com - What You Need To Know About The Obama Loan Modification Plan

Florida Mortgage Loan Modification

Loan Modification Software

You are in serious trouble when you're facing foreclosure but there are remedies available to save you from it. One of them is loan modification. The lender may give you second chance by lowering the interest rate or stretching the payment terms. This makes your monthly payment more affordable and easy to manage. A loan modification can work wonders in your life and it may save your house from impending foreclosure. But be cautious because there are people who are not as helpful as you think they are. They may turn your problem into a disaster by offering you a solution that would not help you but put you into more trouble. I'm talking about a loan modification scam and it has already broken the heart of many people who have foreclosure problem.

We need to accept the fact that this world is not a perfect place to live in. There are scoundrels out there who want nothing but to gain no matter what it costs. People then should be vigilant enough to know how to avoid being a victim of this insensitive act. Here are some tips that may help identify scoundrels in this business.

Avoid people who make too many promises
People who are in the foreclosure stage want fast and effective remedy to their urgent problem. This is an opportunity for crooks to entice people to enter in a fraudulent transaction. When people come knocking at your doors claiming 100% assurance of loan modification that will lower your principal by a large amount and slice down interest by a certain percentage, you have to be alarmed. Incredible claims are offered only by people who want to get something from.

Avoid people who ask you for money before they do something
Scammers usually want nothing but your money. They don't want to help you in anyway. The first thing they would ask you to do is pay up an amount of money for them to start their loan modification process. In the end they would tell you that there's nothing they could do about your loan but they don't offer refund.

Avoid people who offer fast result
Loan modification is a process and lenders usually take considerable time analyzing your application before they come up with a decision. If some people come to you and offer solution within a week or less, stay away from them because their out to get your money.

Know the people you are dealing with
There should be some ways to get information about the people you are transacting with. It would do you so much good if you will find out the intentions of the people you are dealing with. Make sure they have a good refutation and are known for their accomplishments in loan modification. The last thing that you would want to do is to deal with people who would only put you into more trouble than what you already have. People with bad intentions are easy to recognize but it may require your tact and a little bit of investigation skills.

About the Author:

Are you worried about Loan Modification? Do you believe there's nothing you can do? You need to know all of your options - you can be SAVED from foreclosure. Go to http://www.walkawaytoday.org to get your free e-course on understanding foreclosure and how you can avoid it!

Article Source: ArticlesBase.com - Loan Modification - How to avoid a loan modification scam

Loan Modification Software http://www.DirectCapitalSoftware.com/