Alternatives to foreclosure for high-value homes
On behalf of The Rollins Law Firm posted in Foreclosure on Saturday, March 23, 2013.
In recent years, the number of homeowners unable to make their payments has grown significantly. In 2012, the bank eventually repossessed nearly 85 percent of average homes where the owner was in default. Many Mississippi residents find themselves having to make a tough decision when changes in interest rates render them unable to afford their mortgages. With homes worth more than $1 million, more options may be available than some people think. In a remarkable contrast to the average home, luxury homes had only a 28 percent foreclosure rate after homeowners defaulted.
Some lenders are more willing to help luxury homeowners avoid foreclosure. The bank could extend payments or lower interest rates to allow borrowers to catch up. Some mortgage holders may be more amenable to negotiation of a short sale and will sometimes delay initiating foreclosure.
Lenders have trouble selling many of the homes they repossess. With luxury homes, these problems are so magnified by high property taxes and maintenance costs that the bank would prefer not to pay. In many cases, there are also homeowner's association fees that the bank must pay to maintain ownership until the property can be sold. All of this makes it undesirable for a bank to hold onto these properties.
Foreclosure is not the only option. A modification may help homeowners keep their homes. A short sale can help a consumer get out from under a home that is declining in value. Renting out the property may help owners make mortgage payments until the market improves. In extreme cases, bankruptcy may provide relief. An experienced bankruptcy attorney can often review a person's entire financial profile and help determine the best solution.
Source: The Wall Street Journal, "How luxury-home owners dodge foreclosure," AnnaMaria Andriotis, March 8, 2013