SHERIFF SALES

According to the latest reports, over 4000 Iowans who have a Fannie Mae or Freddie Mac mortgage loan are delinquent in their payments. The number of delinquent borrowers is even higher when you include non Fannie or Freddie loans. For some delinquent borrowers a sheriff's sale is the final step to getting out from under a home they can't afford. Many people are deciding to walk away from mortgages that now far exceed the value of their home and their monthly budget. But other borrowers are just as committed to trying to save their home. Unfortunately, the methods being used to avoid foreclosure aren't always as successful as people hope they'll be. Lost paperwork, unkept promises and long delays are common complaints among people seeking mortgage loan modifications. Some clients give up after years of trying.

If you're able to get a modification that results in a significant interest rate and reduction in the principal owed it can be a good start to getting back on your feet. But the majority of loan modifications involve only interest rate reductions and an extension of the term, meaning that the payments in default are added to the back of the loan. Interest in default is capitalized or added to the principal so that a borrower now has an even larger loan balance and is paying interest on interest. Borrowers offered these type of modifications need to seriously consider whether a Chapter 13 bankruptcy, where no interest is paid on the arrearage and the loan balance never increases, wouldn't be a better option. Although interest rate reductions aren't available in a Chapter 13 bankruptcy, it is possible to strip off mortgages that are wholly unsecured. For example, second and third mortgages that are no longer supported by equity in the house can be stripped off and treated like credit cards.

Whatever option a borrower chooses, it's important to not let the process drag on. More than once in the last few months we've been contacted by homeowners who had been told by their mortgage lender they would receive a loan modification only to have their home sold at sheriff's sale. When foreclosure is imminent contact us at www.thompsonlawoffice.net to discuss your options and decide whether a loan modification or Chapter 13 bankruptcy would be the best way to avoid a sheriff's sale.