More news on mortgage modification trends. The WSJ reports that borrowers who receive a permanent mortgage modification still have lots of other debt. The median ratio of total debt payments to pretax income stands at 63.5%. This means 20% of borrowers (or more) with permanent modifications are likely to re-default, primarily because of those high debt levels. If you have significant … [Read more...]
“I Want Out of My Mortgage. What Can I Do?”
August 19, 2010 By
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 … [Read more...]
Reference Materials for Home Affordable Modification Program (HAMP)
July 29, 2010 By
Although the Home Affordable Modification Program (HAMP) has been widely reported as under-serving those in need, and hat has been our clients' experience here, if you are considering filing for bankruptcy protection or have already done so, and you have also applied for HAMP, this guide explains policies and procedures related to borrower outreach and communication. Chapter 13 bankruptcy must … [Read more...]
A Roof Over Your Head or Your Credit Score?
May 13, 2010 By
Q: I'm unemployed and will soon have to choose between paying the mortgage and paying my other debts. If the unemployment continues I'll have to choose between feeding my family and paying any bills at all, including the mortgage. What can I do to preserve my credit score while I look for a job and get back on track? A: There's no one-size-fits-all strategy. Within the past month, we've had … [Read more...]
Doesn’t the IRS Say My Debt Forgiveness Income Can’t Be Taxed?
April 14, 2010 By
All this talk about mortgage principal reduction and mortgage modification in the general press is incomplete and often confusing. People searching for answers can even find that information on government websites is too general for their specific needs. Take, for example, debt forgiveness income. This IRS page on The Mortgage Forgiveness Debt Relief Act and Debt Cancellation says, in part: … [Read more...]
Strategic Default: Part 3 of 3
April 5, 2010 By
Here are three common questions asked of my partner, Rick Mitchell, and me by homeowners considering defaulting on their mortgages. I can't afford to pay my mortgage and my other bills. The house is under water. I've asked for a modification. How long do I have to decide whether strategic default is an option? I don't want to come home and find the locks have been changed on my house. The lender … [Read more...]
Debunking Strategic Default Myths
April 2, 2010 By
Myth: strategic default is limited higher-income debtors. In our experience, clients across the income spectrum have considered and engaged in strategic default. Myth: strategic default is limited to investment properties. In our experience, clients have strategically defaulted on primary residences as well as investment/rental properties and commercial properties. Myth: lenders are eager … [Read more...]
Cash for Keys, Neither Simple nor Straightforward
March 31, 2010 By
As my partner, Rick Mitchell, outlined in "Cash for Keys?" walking away from a mortgage obligation is neither simple nor straightforward. As with short sales, 90%+ of our clients have other debts in addition to the mortgage debt that's addressed in a deed in lieu/cash for keys offer and those debts remain after a deed in lieu or other "mortgage fix." For these people, a deed in lieu is at best … [Read more...]
Strategic Default: Part 2 of 3
March 29, 2010 By
The term "strategic default" has been in the news. With 25% of American homes valued at less than the balance of the mortgage, and some of those "underwater" mortgage holders out of work it's no wonder. For those who can't stay up late enough to watch Stephen Colbert, here's a video clip on this subject. After he talks about the bankers testifying on Capitol Hill, he gets to The Word: "Honor … [Read more...]
Cash for Keys?
March 25, 2010 By
The copywriter who thought up "Cash for Keys" did a good job. Unfortunately, the process isn't as simple as the catchy title implies. You don't simply hand the keys over to the mortgage company, take your $1000 to put down on an apartment and walk away. [important]Unless you file for bankruptcy protection, any time you sell or surrender your home for less than the balance due on the mortgage(s) … [Read more...]