We hear this question more and more these days, which is a bit like asking your doctor, “My back hurts. What can I do?” Much, much more information is needed in order to put the problem into context.
A problem spanning all income brackets
We have seen people in all walks of life in our offices asking for advice, including:
- Well-heeled married couples with household incomes in excess of $250,000 who can no longer afford to service the debt on $500,000.00+ mortgages on their primary residences plus a few hundred thousand dollars in mortgages on rental or other investment property
- Single homeowners who have lost their jobs and cannot afford their $1200 monthly mortgage payments on unemployment income
Little help from the feds
A New York Times article noted that while 3-4 million borrowers were supposed to receive assistance with their unaffordable mortages through the federal program designed to keep homeowners in their homes, only 390,000 homeowners have seen their mortgage terms permanently modified.
A Harvard law school professor and a consumer bankruptcy expert, Elizabeth Warren, quoted in the same article, said, “Fifteen months into this program, for every one family that appears to have made it to a permanent modification that’s likely to stabilize that family in that home, 10 more have been moved out through foreclosure,” she said. “This is a program that’s just — it’s behind the curve.”
Indeed, very few of our clients received mortgage modifications. Some have gone on to file for bankruptcy, which bought them time to save money to relaunch their lives, while others have fought foreclosure proceedings and still others have moved in with relatives to move on with their lives.
There is no “one size fits all” approach to these situations. A telephone conference with a knowledgeable, experienced bankruptcy attorney is the first step in getting some peace of mind about this kind of problem.