Are you facing foreclosure, because your mortgage payment is too high and your home value is too low to sell?
If you’re one of the many millions who have been caught with high mortgage payments and not enough income to pay them, you’re now facing foreclosure or the possibility of foreclosure.
What Happens When You Can’t Make Your Monthly Mortgage Payment?
Many, who sought underwater mortgage relief with the government HAMP option, found that banks were not giving the loan modifications that people were counting on. And, if they were offered a modification, it wasn’t enough help. So the banks chose to foreclose and take their home. It’s part of the agreement in the mortgage note. If you don’t pay, they take your house.
What Happens In Foreclosure?
If all other options fail, then the last one is to let the house go into foreclosure. But, what happens next? This all depends upon where you live. If you’re in a state that doesn’t have any laws protecting you when the bank forecloses on your home, you still end up owing the bank for the underwater part of the underwater mortgage debt. So foreclosure isn’t really a good way to get underwater mortgage relief.
The Deficiency Judgment
If you’re in a state like California, when the bank takes your property back in the foreclosure process, your mortgage debt is wiped out. It doesn’t matter that the property was worth less than what you owed. You still don’t owe any more to the bank.
But in states that don’t have laws like California, when the bank takes your house back in the foreclosure process, the difference between what the bank can sell it for and what you owe is still a debt that has to be paid. The bank can file a deficiency judgment and come after anything else you may have to collect on the remaining debt. In some cases they may have an option to attach your wages from your job.
More Banks Are Filing Deficiency Judgments Today
In the Washington Post article Lenders go after money lost in foreclosures Dina ElBoghdady says “Over the past year, lenders have become much more aggressive in trying to recoup money lost in foreclosures and other distressed sales, creating more grief for people who thought their real estate headaches were far behind.”
The article talks about the Palacios who received a demand notice for $148,064.02. That’s a lot of money to come up with after you’ve already lost your home.
Even if the Palacios had sold their home on a short sale like the Somers did, they would have been stuck for the difference and be slapped with a deficiency judgment. The Somers second mortgage holder did just that and the Somers received a demand for $85,000.
How Can You Avoid The Deficiency Judgment?
One way to get out of paying the deficiency judgment is to file for bankruptcy and list that judgment as a debt you owe. When you finish the bankruptcy process, that mortgage debt will be wiped out. But it’s a rough way to go after you’ve already lost your home.
A Better Way To Avoid A Deficiency Judgment
If you are facing foreclosure and are looking for a better way to avoid a possible deficiency judgment, look at getting mortgage debt relief through an alternative program like our Mortgage Debt Reset Program. With our program you can reduce your mortgage debt back to 100% financing and also reduce your monthly mortgage payments to about half of your current payments. And there’s no bank qualifying to do it. That’s real underwater mortgage relief.
To get the specific information you need to qualify for our Mortgage Debt Reset Program go to Find Out More About Our Mortgage Debt Reset Program and sign up to receive our free no obligation information package.
