If You Were the Homeowner, What Would You Do?

Question

A homeowner is 45 days away from a foreclosure auction. They’ve fallen behind six months on payments due to job loss but just landed a new job and can now afford their regular mortgage moving forward.

Here’s the challenge:

• They owe $12,000 in arrears
• They have $40,000 in equity
• The lender won’t agree to a forbearance but offered a repayment plan that’s too expensive

They owe $12,000 in arrears

They have $40,000 in equity

The lender won’t agree to a forbearance but offered a repayment plan that’s too expensive

If you were advising this homeowner, would you:

• Help them sell the property and walk away with their equity?
• Help them explore loan modification options to stay in the home?
• Or try something more creative, like a short-term private loan to reinstate the mortgage?

Help them sell the property and walk away with their equity?

Help them explore loan modification options to stay in the home?

Or try something more creative, like a short-term private loan to reinstate the mortgage?

Joseph Beilke · Answer

If the new income is just enough to make the mortgage payment and not make up ground with the repayment plan which I bet is a 12 month repayment plan, I would probably lean on a longer term private loan to make up the rears.

NEXT I would encourage them to find 2nd job and sell stuff to work out of this hole.

Jules Aton · Answer

I can't speak to how I would advise a client but personally I would accept the payment offer even if too expensive and add a second job or whatever to right things asap. Unfortunately the history of not paying the mortgage for six months probably doesn't indicate a high likelihood of success.