Foreclosure and Loan Modification Blog

Retirement is supposed to be the best time of your life, the reward for your decades of hard work. A time to not worry about the things you've been worrying about your whole life, especially money. Unfortunately, many seniors find themselves worrying not just about money but also about avoiding the foreclosure of their largest asset, their home, in their golden years.

While dealing with the prospect of foreclosure is never easy, it can be especially difficult for retired people, the elderly, and those on a fixed income. People plan so that the expenses for the rest of their life can be paid from their Social Security benefits, retirement plan, and savings before they retire. But sometimes there are unexpected expenses that throw everything out of balance and leave a retiree unable to pay their mortgage.

Homeowners facing foreclosure whose mortgage loans are insured by Fannie Mae or Freddie Mac have not been eligible for principal reductions, which is one of the best tools for making mortgage payments more affordable, when modifying their loans. That may be changing soon.

Fannie Mae and Freddie Mac are regulated by the Federal Housing Finance Agency, or FHFA, which has indicated that it is considering allowing principal reductions.

However there have been conflicting reports on the FHFA's intention. The Wall Street Journal reported in March that Fannie and Freddie principal reductions were going to happen. But that same day FHFA's director Mel Watt said that no decision had been made.

Recently some people in high places have asked the FHFA to allow principal reductions. According to housingwire.com,New York's attorney general Eric Schneiderman wrote a letter to director Watt saying that principal reducing loan modifications“should be deployed broadly and quickly to homeowners in desperate need of this relief from the continuing damage caused by the housing crisis.”

Abraham Lincoln said “He who represents himself has a fool for a client.”

Honest Abe was talking about legal representation when he said that, and a century and a half later his advice still rings true. President Lincoln was a lawyer himself and knew that it just doesn't make sense to act as your own attorney, even if you are one.

But some people have been doing exactly that in recent years while trying to avoid losing their most valuable investment, their home, through foreclosure. Seven million homeowners have experienced foreclosure since the housing crisis began and many of them don't have a clue about how to deal with it.

Their bewilderment is completely understandable. Foreclosure was never part of any homeowner's plan. Unfortunate circumstances beyond the control of any individual homeowner has made foreclosure something that millions of homeowners have been forced to learn about.

Some look into it and think they can handle everything on their own. “How hard could this be? I can answer a complaint and fill out a request for modification assistance without a lawyer.”

Others learn about the laws pertaining to foreclosure and the ways to avoid it and conclude that having an experienced attorney on their side is essential. While every person's situation is different, there are important reasons for everyone with mortgage problems to seriously consider hiring an experienced attorney:

“I love my home too much to just lose it in an auction or hand it over to the bank. When my mortgage started failing, I knew I had to see my lawyer. He put me on Loanmodify^®. I got a loan modification and now my mortgage is doing great and I'm feeling much better.” 

Foreclosure Frank

If you're having difficulty or are unable to pay your mortgage because of a hardship beyond your control that's caused your other bills to increase and/or your income to go down, it may be more than the typical challenges all homeowners go through. It may be a more serious problem known as foreclosure syndrome.

Here are some of the most common symptoms of foreclosure syndrome:

When you have trouble with your mortgage, it's important to start thinking about how you're going to get out of trouble as quickly as possible. The sooner you can understand the issues affecting you and what the potential solutions are, the sooner you can work toward getting what you want, which is avoiding foreclosure and getting back on good terms with your lender.

While it can take years from the time you stop paying your mortgage until until you lose your home in foreclosure, spending that time dilly dallying, lollygagging, or failing to plan is a mistake. You're eventually going to lose your house, so use the time you have to your advantage by saving money, educating yourself, and making a strategy.

This may seem like common sense, and it is, but some homeowners are so overwhelmed by the stress of potentially losing their home that they freeze up and don't do anything. Playing dead is not an effective strategy. Pretending that you didn't get the bank's notices does not make you immune to their consequences. There are productive things to do.

If you guessed that people experiencing foreclosure or the threat of it have a higher incidence of physical and mental health issues including suicide and trips to the emergency room, you guessed right. That's no surprise given the stress of potentially losing your largest investment, moving your family, and having your credit negatively affected. However, you may not have guessed that having an illness is the reason some people go into foreclosure in the first place.

A 2014 study shows that people who had a chronic health condition that worsened as they aged were twice as likely to default on their mortgage and more than two-and-a-half times as likely to fall into foreclosure than people with a chronic condition that did not get worse over time.

The study found that people who got sicker were more likely to lose their job, their income, and health insurance, which made foreclosure more likely. Most people can't make their mortgage payment for long if they don't have a job, no matter the reason for losing it.

And people with a chronic condition who didn't lose their jobs were still at increased risk of defaulting on their mortgage loan. It's thought this is caused by the high medical costs accrued when treating a chronic condition.

No matter what you think the solution is or isn't, the reality is inescapable: healthcare is expensive, and it can cause you to go into foreclosure. It's something that's already happened to many people, and will happen to plenty more.

Do you remember what the country was going through in the late 2000s? You couldn't turn around without hearing something about collateralized debt obligations, credit default swaps, and subprime mortgages. Our financial system was collapsing. Something had to be done.

The government created the Emergency Economic Stabilization Act of 2008, often called 'the bailout,' and the American Recovery and Reinvestment Act of 2009, known as the 'stimulus' or 'recovery act.' The main purpose of the Acts is to protect home values and savings, preserve homeownership, and promote job and economic growth.

To that end, Making Home Affordable (MHA) was created by the U.S. Treasury Department.MHA contains numerous programs intended to help distressed homeowners avoid foreclosure. The programs in it include:

Claiming it is the most common sense and profitable solution to the ongoing foreclosure crisis, WTF Bank has announced the creation of an innovative loan modification program that actually increases the amount of principal owed by homeowners facing foreclosure.

According to WTF Bank's CEO, Shyster McShyster, the Principal Residential Increase Modification Program, or PRIMP, offers underwater and distressed homeowners a solution for getting even deeper underwater and more distressed.

Under the terms of PRIMP, homeowners who owe more on their mortgage loan than the home is worth and can't afford their monthly payments will have up to $125,000 added to their principal balance, making the payment even more unaffordable.

Difficult life events are all the more difficult when there's uncertainty that goes along with them. The worrying, waiting, and wondering about how things will work out makes it even harder to handle. That's especially true of a hardship that seven million Americans have experienced in recent years: foreclosure.

Everyone knows that if you stop paying your mortgage, your house will eventually be sold at auction or repossessed by the bank. What most people don't know is exactly how the process will unfold over what period of time, and how to determine if they can afford to keep their home and avoid foreclosure.

The foreclosure time line differs according to the laws in your state. There are free resources on this site that can help you understand them, including the differences between judicial and nonjudicial foreclosure. You need to be aware of that information if you've defaulted on your mortgage loan.

But the purpose of this post is to help you determine if you can afford to keep your home. Here's how:

It wasn't that long ago that everyone was talking about foreclosure and people were losing their homes in numbers that hadn't been seen since the Great Depression. At one point one out of every 248 households in the country had received a foreclosure notice.

Right now though, in 2016, you don't hear all that much about foreclosure. There are some good reasons for that. It's not as big of a problem as it used to be, home values have risen significantly, unemployment is down, and the Great Recession is technically over.

It's good that things have improved so much from where they were, but there's still a long ways to go before we can say these problems are behind us. Not all of the country's wounds have completely healed from the recession, and those that have left scars.