Should you Default on your Hamilton NJ Mortgage?

By
Real Estate Agent with RE/MAX Tri County

It seems like every day I meet someone who is having trouble paying his or her mortgage.  When it becomes a choice of buying food for your family, or clothes, or making that payment, the choice is not easy.  Marion Anthony recently published an article on the 5 Common Questions Homeowners Have about Default.  Here are some highlights.

"1.  Should I intentionally default on my home mortgage?
Today, many people are ‘intentionally' or ‘strategically' defaulting because cash is more valuable than credit.  Rather than defaulting, the best thing to do is use the Section 702 program of the Obama act, which allows a qualified third-party buyer to take possession and make a ‘bona fide' offer to the bank. This helps show the debt ‘settled' on your credit and can eliminate the second mortgages completely.  Walking away and allowing the bank to foreclose still allows the second lender to render a judgment-and possibly garnish your wages. You may also have to file for bankruptcy to recover from the credit nightmare.

"2.  As a borrower, what are some ways I can gain leverage with my mortgage holder?
One way to gain leverage with a lender is to establish a ‘substitute mortgage'-a security pledge that is offered to the seller's lender, with a third party (lawyer or Escrow company) for a lesser amount of the current payment. Over time, this will result in a significant amount of collected funds that can be used as negotiating leverage to release the borrower from the debt, or dictate terms for a loan modification in the borrower's advantage.

"3.  Why have loan modifications and foreclosures become the predominant answer for so many in distressed property situations, and why can this be problematic?
The reason why loan modifications and foreclosures have become the answer for so many is because many real estate professionals erroneously consider the short sale process to be too complex.  The result is unnecessary spending of tax payer's funds that are being used for the alternative solutions, when capital contributions from the ‘street level' can be used to offset the losses and payoff the delinquencies without requiring such taxpayer contribution.

"4.  Why is a short sale strategy more advantageous than a loan modification or foreclosure approach?
The reduced payoff in a short sale can release you from the debt obligation. This allows you to re-establish your credit faster and re-enter the market much wiser.  A loan modification actually builds a debt trap...and a foreclosure ruins a homeowner's credit and takes a much longer time period to recover from.

"5.  I've heard borrowers in default need a ‘General Public Disclosure?' Why?
Knowing your options, as detailed on a General Public Disclosure document, can make all the difference in establishing a deal that's in the homeowners' best interest."

You'll find Ms. Anthony's full article at RISMedia.com.  Just reading the highlights above should convince you that a short sale is far better for you, the homeowner, than a foreclosure. 

I'm experienced in helping both buyers and sellers in short sale situations.  Don't wait and let the bank start threatening foreclosure.  Contact me now to discuss your options and the price you can expect for your Hamilton NJ home in today's market. 

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