According to the Wall Street Journal, nearly 40% of homeowners who took out second mortgages are underwater on their loans, more than twice the rate of owners who did not take out such loans. Second mortgages have made it more difficult for troubled borrowers to negotiate loan modifications with lenders. Economists say borrowers with second mortgages on homes that are underwater are far more … [Read more...]
Charlotte Short Sales: Not a Straightforward way out of a Mortgage
June 13, 2011 By
With 23.5 percent of Charlotte metro area homes valued at "negative equity" (or near it) mortgage holders are looking for exit strategies, including short sales.An article in Charlotte Magazine described the dynamics behind the "surge" in short sales like this: Legal challenges have put a halt to many foreclosures, and the government is encouraging banks to accept short-sale offers from … [Read more...]
Chapter 7 Bankruptcy: Can I Keep My Home?
March 14, 2011 By
Some Chapter 7 debtors are current on their mortgage obligations at the time of the bankruptcy filing, and there is no equity (value above mortgages and liens on the property) that can be reached by creditors. In this situation, the debtors may keep, and continue to own, the property throughout the Chapter 7 case and after the case it is closed – so long as they continue to uphold their end of … [Read more...]
Credit Scores After Short Sales, Foreclosures & Bankruptcies
October 27, 2010 By
Clients and prospective clients almost always ask about the effect of their financial difficulties on their credit scores. This information is elusive. Finally, USAA has some guidance on how your score is determined and "hit."A myriad of variables combine to create a score:Your payment track record. How much you owe. How long you've had established credit. Whether or not you're … [Read more...]
Good Alternatives to Foreclosure?
October 25, 2010 By
This week a WSJ article quoted the head of the NY Federal Reserve Bank addressed, saying “the Federal Reserve actively encourages efforts to find viable alternatives to foreclosure, like loan modifications, or deeds in lieu.” Let's take a look at each of these alternatives. How about a modification? If you CAN get a modification, and if the modification allows you sufficient room to pay … [Read more...]
First “Flipping,” Now “Flopping”
June 21, 2010 By
Bloomberg Business Week published an article on a new scheme for profiting in the real estate market during a time of unprecedented foreclosures. Back during the boom, people "flipped" houses by buying low and selling high. During the bust, that same premise is being used to "flop" houses through the use of short sales.In flopping, investors or home buyers hire brokers to assess a home for … [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...]
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...]
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...]