Is Loan Modification Or Bankruptcy A Better Choice for Atlanta Homeowners?
The good news is that a new FHA program could help underwater borrowers make their mortgages more affordable. The bad news? For many homeowners, it's too good to be true, say Atlanta bankruptcy attorneys.
Known as the Short Refi initiative, the program allows lenders and investors to agree on writing off a portion of a loan's principal balance - at least 10 percent. Borrowers are able to participate so long as they don't currently hold an FHA loan and are current on their house payments. So what's the problem? Loans held by government-backed Freddie Mac and Fannie Mae - in other words, the majority of mortgages in the U.S. - are ineligible.
Large banks like JPMorgan Chase and Bank of America are citing that as a reason the program won't work - and are using it as an excuse to not participate.
If you're fortunate enough to meet the requirements, it could be a lucrative deal. So far, modified loans have reduced principal balances by an average of 33.5 percent. That means a $300,000 mortgage could be slashed to under $200,000.
Of course, if you don't meet the requirements, you're stuck with your $300,000 mortgage - even if your house is only worth $150K. But that doesn't mean you have to struggle to make payments. Most Americans have difficulty paying the mortgage because their debts are growing as fast as their home value is declining. But bankruptcy has the power to stop foreclosure, giving homeowners time to seek a court-approved payment plan for lowering debt.
With less money going towards your debt each month, you'll ideally have more around for mortgage payments. Millions of Americans have found relief from financial troubles by filing for bankruptcy. Wondering if you can join them? Find out for free when you try a complimentary personal debt analysis courtesy of our Atlanta bankruptcy attorneys.