Mortgage Debt Troubles

March 18, 2012 by  Filed under: Loans 

Homes are succumbing to foreclosure on every street and home values are taking the plunge. The last few years have been quite rough on the housing market and the mortgage industry itself. While there is no question that mortgage lenders haven’t always been fair or willing, they too have suffered a huge hit recently as efforts were stepped up to regulate practices and order restitution for any wrongdoing. As lenders transition over a new leaf, homeowners may soon find that their mortgage debt options are greater than ever before.

The Options

Always heard and seldom sought, refinancing offers have been circulating for a while. Lenders prefer this option over other alternatives because it allows them to get homeowners into a new mortgage loan with additional costs. As the more profitable option for lenders, many homeowners have found refinancing to be too expensive or out of their reach. The closing costs associated with refinancing have made this option a costly one for many. Already struggling to maintain their current mortgage payments, few homeowners have the extra cash lying around to cover out of pocket expenses. Further, many lenders have previously held very high credit standards for eligible borrowers, pushing the option to refinance past the point of reality. Also, homeowners who have already defaulted on their loan are rarely eligible to refinance.

Loan modifications are the preferred option among homeowners, as they can lower payments without additional out of pocket expenses. Lowering interest rates, temporarily suspending payments, waiving delinquency fees and extending the life of the loan are all modification solutions that don’t cost the homeowner. In the past, many lenders have shied away from loan modification and even rejected qualified applicants. Once viewed as costing the lender, many were unwilling to consider this option. However, after much litigation the mortgage debt settlement has offered to provide incentives to lenders willing to help homeowners pursue this option. Lenders may now be eligible to receive cash or credits for approving qualified homeowners.

Once a process that carried much stigma, short sales are becoming increasingly popular. Homeowners used to avoid a short sale at all costs, but many are finding they can be the better alternative to foreclosure when refinancing and modifications aren’t available. With a little patience and effort, a short sale can alleviate the financial burden of a mortgage loan without the consequences of a foreclosure. Lenders are also becoming more open to the idea of short sales, as research shows that they can obtain 30-40 percent more for the defaulted home in a short sale than a foreclosure. Short sales also better protect the integrity of the home and neighborhood, making it a win-win situation for those with dwindling options.

Christopher Lee, of Lee Law Firm, understands that financial hardships can affect honest, hard-working people. His early experience growing up in a very blue collar family in a rural area of Indiana, made a significant impression on his business philosophy today. As a child, he watched his family struggle as money didn’t come easy and his parent work hard to provide for their family. As a foreclosure Dallas, Tx attorney his practice has given him the opportunity to directly impact the lives of many people.

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