Abandoning Your Home and Walking Away – Good Idea or Bad Idea?

Abandoning your home and deciding to just walk away from your mortgage has repercussions. You may be responsible for a deficiency created between the sale price of your home at the foreclosure auction and the amount you owed your lender on your mortgage. This is known as a deficiency judgment. Your lender may be able to obtain one against you. While not all states allow deficiency judgments, it is not a good idea to just walk away without checking the laws in your state and consulting with a foreclosure defense attorney to find out what your legal obligations are and what other options you may have to save your home from foreclosure.

Home Affordable Modification Program Better Alternative

A better alternative to help you keep your home is to seek a mortgage loan modification under the Obama Administration’s Home Affordable Modification Program (HAMP). The program is voluntary, so both the lender and the borrower must agree to participate. The Treasury Department’s recent report reflects that lenders participating in the program, including Bank of America Corp. and JPMorgan, successfully converted 168,708 trial plans into permanent loan modifications. This was up from 116,297 through January 30, 2010. There were more than 666,000 borrowers that participated in the trial repayment plans according to the figures released by the Treasury. Bank of America represents about 1/3 of the 3.4 million borrowers that were eligible for the program. They serviced 22,300 permanent modifications. JPMorgan had 437,323 eligible borrowers and serviced 20,450 with a home loan modification.

Borrowers that participated in the mortgage loan modification plan saved an average of $500.00 a month on their mortgage payments. However, the 31% debt to income ratios have only dropped to 59.8 from 76.4 so there are some concerns that too many borrowers still may not be able to afford the reduced payments. But for a significant number, the program is helping them keep their homes. The hope of the HAMP program is to eventually get the lien holders to reduce principal as well so that borrowers can obtain some positive equity in their properties which will help turn things around for the housing industry as well. You can learn more about the entire process by visiting http://www.fairhomeloan.org/.

January 2010 Home Sales

According to the latest report released by the National Association of Realtors, existing home sales fell 7.2% in January 2010. The good news is that home sales are up 11.5% over sales a year ago the same time. The extension of the federal first time home buyer and non-first time buyer credits are helping to improve the number of home sales according to the NAR. However, the total supply of homes went up in January 2010 to a 7.8-month supply from a 7.2-month supply in December 2009. Industry experts hope that the sales will increase as spring approaches and buyers continue to take advantage of the credits by purchasing distressed properties helping to lower the inventory and keep home prices more stable. In order to qualify for the credit, you must be under contract by April 30, 2010 and close on or before June 30, 2010.

While saving your home from foreclosure is a challenge for upside homeowners, buyers who need mortgages are facing challenges as well from competition among all cash buyers. Cash buyers have an edge on the market because they can close quickly. This is an advantage to distressed homeowners and to banks that own REO’s because they know the buyer qualifies to close the transaction. Smart buyers are working with local Realtors to assist them with finding properties and home buying strategies.

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