Foreclosure is typically a very difficult time for homeowners in Massachusetts and elsewhere, as they may lose their home in the proceedings. However, the story of a couple from Brockton shows how real estate owners may be able to obtain a loan modification that will allow them to keep their property.
The couple from Brockton has been fighting to keep their four-bedroom house from foreclosure for the past seven years. They paid $297,000 for the house in 2005 without putting any money down, which resulted in increasing their debt to a level they could not handle.
The couple’s mortgage lender offered to reduce the debt on the mortgage by $190,000 in December 2011. As part of the lender’s offer, the interest rate on the mortgage was also reduced to 4.4 percent, which cut the couple’s monthly payment to $1,400. This reduced amount was about half of what the couple was paying previously.
The couple claimed they were the victims of a predatory loan with a high interest rate, a plight that may be familiar to homeowners in Massachusetts. Mortgage lenders have been reluctant in the past to reduce the debt of homeowners when they owe more than what the home is worth. But political pressure and government incentives have increased the likelihood that lenders will forgive some of the debt owed by these underwater borrowers.
The financial burdens of high mortgage payments can be debilitating. Homeowners need to respond to any threat of an impending foreclose immediately to maximize the legal options available to them. They should learn about current foreclosure laws and available government programs in order to determine the best course of action in light of their particular circumstances.
Source: The Boston Globe, “Homeowners get a break,” Jenifer B. McKim, Oct. 6, 2012