In the past couple of years, a lot of homeowners have found themselves in need of some foreclosure help. With high rates of unemployment and decreased wages, more people are finding making their payments harder every month. Priorities have to be set and the first one needs to be food for the family. And lenders don’t seem to be real sympathetic to the people in trouble. Let’s take a look at what kind of assistance is out there.

For the lucky ones that are not residing in the areas with property values falling like rocks, refinancing might be the answer to their troubles. If a homeowner bought their home when mortgage rates were high, then they might be able to refinance their loan at a smaller rate. This would bring the payments down and for some this is just what they need.

401(K) 2013

©401(K) 2013 – flickr

But banks are very squeamish to refinance anyone who has been unemployed in the recent past. Even with a new steady employment, their credit rating may have been affected by late payments. But there is one point of good news. The federal government has allocated billions of dollars in aid to help these banks get over their nerves and to give mortgage help to those that need it.

Then there are the unlucky ones. Millions of people live in homes that are located in areas where home values have plummeted like rocks off a cliff. In some areas prices have fallen over 20% in the last two years. For those people who bought when prices were at record levels, the luck ran out. Many of them owe more on their mortgage than what the home itself is now worth.

And then there is a pesky bit of business with mortgage lenders. They usually want to get all of their investment back with interest. If one of the unlucky homeowners falls behind in their payments, they have few options. Selling their property won’t bring in enough money to pay off the lender. For them, mortgage help needs to come in the way of mortgage modification. This is when the lender changes the terms of the loan to help the homeowners.

What other types of mortgage assistance are out there? Well, if the homeowners can find someone willing to buy their home, but not at a price that will pay the lender, they might be able to negotiate a short sale. A short sale is when a llender, agrees to forgive any amount of money still owed on a mortgage once a home sale is final. Most lenders, will not agree to this unless they have few other options. But the expenses of eviction and foreclosure can be a good way to argue for it. And there are consequences to the borrower. Taxes can be due to the IRS for the amount forgiven by the bank. Another choice might be to see if they can rent the property} out for an amount that will cover their mortgage and taxes.

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