Strategic Default - Time to talk about this again

We read an article on Reuters.com about strategic default this morning, and it resonated with us because we are representing a homeowner in this situation right now. The homeowner thought about a strategic default for over two years before taking the first step. It's a very difficult choice!

The article has some valuable information, and a list issues to consider.

If you are underwater on your mortgage please read this article. If you think that strategic default is the answer for you, please contact us right away, at the very beginning, for advice and help along the way.

A reprieve for unemployed borrowers

Fannie Mae and Freddie Mac recently extended their foreclosure forbearance programs to give short-term aid to unemployed homeowners, but housing counselors warn that these borrowers will need to look at longer-term solutions.

Details:

• In a forbearance program, a lender agrees not to foreclose on a property and gives the borrower several months’ grace from or reduction in monthly mortgage payments.  The programs work best for temporary setbacks, like job loss, health problems, or natural disasters.
• There are drawbacks to the forbearances though. The most-significant drawback is a larger total debt from the smaller payments.  The unpaid balance continues to increase during this time.
• The new temporary mortgage payment is often set to 31 percent of the household income; in some cases lenders agree to accept no payments.  Fannie Mae’s extended unemployment program, first offered in the fall of 2010, limits any nonpayment or other forbearance plans to one year, with the second six months requiring approval by both Fannie Mae and the lender.
• However, even with the program in place, the lender could still report a mortgage as delinquent, which could adversely affect the borrower’s credit score.
• Because some agreements add onerous term and conditions, homeowners should also consult with a housing counselor certified by the Dept. of Housing and Urban Development.

The New York Times has a full article on this subject (we've just covered the bullets).

Need Directions? Ask a Realtor

By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.

I'm always amazed at the amount of local community knowledge a typical Realtor has. If you need to know about the local preschool situation, where to get the best cup of coffee within earshot of a specific address, where to get free Internet while you enjoy a hot beverage or quick lunch, and where the best morning bun in town is served, ask a Realtor. Seriously.

Read the rest of the story...