Saturday, February 4, 2012

Mortgage payments on my "under water" home are no longer affordable due to financial hardship. What can I do?

Question: I have been paying my mortgage on-time for many years. Now I am late on my payments by one month as I have ended up in financial hardship due to certain events in my personal life. Very soon I will not be able to afford my home. What can I do? I owe approximately $225K and my home is now only worth $200K. In the past, I tried to modify my mortgage and after a year of loan modification process I was denied.

Response: Whether you qualify for loan modification depends on various factors, such as gross monthly household income, debt to income ratio, net present value of the home. On the mortgage of $225K, you could likely qualify for HAMP loan modification (if your servicer participates in HAMP) if your gross monthly income is approximately $3K. However, if you are still unable to afford your monthly payments or you have insufficient income, then you should likely consider a short sale.  Consider contacting a knowledgeable attorney, who could advise you on options that would work best for you.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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Sunday, January 29, 2012

Does signing over quitclaim deed release me from financial obligation on foreclosed property?

Question: The bank is about to foreclose on my home. Someone had approached me and said that he will settle the debt with the bank if I sign over a quitclaim deed. He also stated that he will immediately take over possession of the house, deal with the bank, the tenant, etc. and I will be able to walk away from the house debt-free. I am very skeptical that this can happen so easily. I am worried that quitclaim deed does not release me from the financial obligation on the property in case the property ends up in foreclosure. How can this person make a deal with the bank? How can I get the bank to release me from my mortgage?

Response: You are absolutely right. Whoever is telling you to do a quitclaim deed is trying to scheme you. While this individual will become the new owner of your property, you will continue being financially obligated to the bank. It will be your credit report that will suffer and essentially you will be the one sued (although the new owner will be sued too for the sake of having his interest in the property cut off). The new owner will not be able to modify the loan or negotiate anything with the bank because the new owner is not the borrower and the borrower is the only person that the bank will deal with. If you want to get rid of this mortgage, sell your property to this individual or any other interested buyer and satisfy the mortgage. If the buyer will need to take out a mortgage, then let it be in their name, not yours. If your property is worth less than the mortgage, then do a short sale. This way, you will also be able to get rid of financial obligation to the bank, but do not, under any circumstances, transfer the ownership of the property to someone else while remaining financially responsible for it! If you want to learn more about your rights in this case and the proper transfer process, consider contacting a knowledgeable attorney.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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