Laid off and can't pay mortgage - what's the outcome?

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jman7559

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So - here's the breakdown...

We live in CA, and have a home that we bought 7 years ago. Originally, we had it financed with 2 loans -- a first and second both 5 year fixed/then variable - no home equity line of credit. Two years ago, we refinanced for one consolidated loan through Countrywide (the loan was then sold to Bank of America) for a 30 year fixed at 6.25%. The market rate on our home is approx. $350,000 and we owe $399,000.

We were a two income family until I was just laid off this week (after 10 years on the job...). My wife's salary alone would not cover the payment.

Is it possible BOA would lower the rate/princial enough so we could continue living in the home? If not, would it be better to ask for a short sale or just "walk away"? If so, in either case, would we be "on the hook" to pay any difference between the sell price and the remaining balance on the loan?

Thanks for all your legal advice!
 


If you walk away from your mortgage, you'll be stuck, should the lender choose to come after you.
Usually, the lender won't.
Many lenders just write off the loss.

BUT, the lender often sells the paper (your note) to another entity.
It is that entity that comes after you for the difference.

You could try to get the lender to agree to a short sale.
You could walk away, and let nature take its course.
You could file bankruptcy, and leave no crumbs on the table to haunt you.

Why not discuss your options with several attorneys in your home town?
The initial consultation is normally free.

Or, you could do nothing and see what happens.
Rolling the dice this way might be a consideration.
Why?
BOA, CitiBank, Chase (all the majors) are under fire for the way they did foreclosures.
Its all over the news (Google it).
So, they've put a moratorium on foreclosures to fix the problem.
This could let you buy more time (for free), and maybe get the BEST solution, rather than a solution.
In fact, BOA might be more motivated to deal, after the study is complete.

Lots to consider, my cyber-friend.
 
Thanks army judge... I know we've got several options, so there's lots to consider. Fortunately, we're still current, so I think our 1st call will be to a lawyer for options and then to BOA and see what they might do for us (its an unlikely stretch they'd be of much help, I know).
 
There are 7 examples of what your lender may be able to do to help you:

1. Waive late payment fees

2. Give you an extended period of time (perhaps as much in 12 to 24 months) to get caught up on your payment by adding a fraction of your outstanding loan payment balance to your payment each month until you can catch up

3. Accepting a partial payment

4. Moving your current payment to the end f your loan, allowing you time to get your financial house in order

5. Granting you a separate interest-free or low interest personal loan for the amount of your missed payment

6. Interest or principal reduction

7. Loan refinancing or re-amortization
 
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