More and more people have found themselves upside-down and sideways with regard to their home these days, than ever before. I know we are.
We’re paying on a mortgage that is about $80,000 thousand dollars more than the current market value of our home, at an interest rate of about 7%.
We’d like to refinance to take advantage of the lower interest rates, but we can’t because we owe too much. If we try to sell, we can’t - unless we do a short sale.
In the meantime, I lost my job, and it appears I’m unemployable. We’re not even arguing the high mortgage. But the interest rate?! If we could get that down, it would be a big help to us.
Should we keep paying this high mortgage? Or, should we walk away? If we decide to walk away we could live here “rent” free for about a year or more and save up about $20 to $30 thousand as a down payment for a new home, with a lower interest rate.
Are those our only choices? No!
First thing to do is call your current lender. See if they are willing to work with you. If they actually own the loan, and are servicing it too, there’s a chance they may work with you.
Now if they’re strictly a servicer, you’re probably wasting your time. Servicers generally make more money if they initiate foreclosure proceedings and even more if they successfully foreclose. They have no incentive to work with you.
Another thing you can do is read through your closing documents. Look for MERS or Mortgage Electronic Registration System, Inc. If you find their name in your documents there’s a very good chance that they can’t prove their right to foreclose.
If you can’t find your closing documents you can go to the following site and type in the property address.
If you find MERS in your loan documents, find yourself an attorney, who is familiar with MERS or connect with a group litigation law firm.
By looking into a Group Litigation firm, you can save yourself a chunk of change, but you’ll have to do some research and some comparison shopping.
Each group has a different price structure and slightly different goals. Some will ask for a flat fee, while others will want a flat fee plus 30-35% of any cash settlement.
Some will sue for damages others will sue to have the loan restructured to reflect the current market value, at a more favorable interest rate.
That’s assuming you’re still in your home. If you have already had to leave and the bank has resold the property, then you be looking at a cash award of some sort.
We looked into one attorney to represent us, that looked promising. He wanted a flat fee up front and 33% of the amount he saved us! Well, if he succeeded in getting us a loan based on 80% of current market value, that would have been great.
80% x 150,000 = $120,000
But, with our mortgage currently at $220,000, that’s would have been $33,000 we would have owed him.
He was going to be kind enough to create a lien against our home, charge us 7%, with a five year balloon.
Wait a minute. Our house is worth $150,000. We’d have a new first lien of $120,000 plus a second at $33,000 for a total debt of $153,000. In five years we would have had to refinance or sell our home to pay off the attorney’s lien. Upside-down again!
So, be careful what you negotiate with these guys.
The other thing to consider is, you may be able to stop making your monthly payments while the attorneys are suing your lender. Most judges will not allow foreclosure proceedings to continue while the lender who is attempting to foreclose is being sued by you.
However, there’s no guarantee of that, so be prepared to get legal assistance if you decide to stop making payments.
In the meantime, the Attorney General’s in many states have either initiated lawsuits or are reviewing the potential for lawsuits against MERS challenging their right to foreclose. You may wish to contact your State’s Attorney general, and see what they suggest, if you can’t afford to get involved in your own suit.
Good luck. And don’t give up without a fight. These lenders and MERS have been actively practicing fraud, creating lot of victims. It’s time to fightback and let them know the consumers are not going to role over and play dead!
PS: Here are a couple other useful sites:
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