Strategies for the Struggling Homeowner
America is rebuilding. I don’t mean that in cliché politician-speak sense, I mean we are literally putting the fundamental pieces of our economy back into place, starting with the unprecedented imbalances and volatility in the Real Estate market. As we work on a case-by-case basis to give troubled homeowners options for stability, we Real Estate attorneys are in the thick of this nationwide restructuring.
We’re expected to look at the big picture for our clients, and because of our knowledge of how individual elements of the system function on the whole, we are usually a primary source of guidance in the decision-making process of distressed homeowners.
A good real estate attorney is able to evaluate each client’s circumstances in light of these various perspectives and then offer sound advice.
If the property is worth less than the debt against it, the homeowner might consider a modification of the loan, a chapter 13 to strip off the lien of a second mortgage lender, or a short sale.
If the property is in foreclosure, tactics include forbearance – an opportunity to pay back arrears, a chapter 13 reorganization, a short sale, a deed in lieu of foreclosure, a consent foreclosure, or an outright defense of the foreclosure.
Each strategy has its advantages and difficulties and it is only by knowing the client’s ultimate goal that an attorney can effectively advise on the best course of action.
There are some lenders who will pursue collection on a second mortgage, even though they do not pursue a foreclosure. Generally, they are looking for a settlement on the debt and will release the lien against the property if they are satisfied with the settlement.
Finally, there should be consideration of the possible tax implications of any solution obtained for their client.