Should You Keep The House?

25 Jul Should You Keep The House?

house of cardsRising mortgage defaults have triggered Congressional interest and efforts by lenders to offer borrowers alternatives to foreclosure.

Chapter 13 is a bankruptcy option that allows borrowers to catch up on mortgage arrears and save their homes. It works well and inexpensively.

But too few are asking: should this home be saved?

I see families that are economically crippled by mortgage payments that consume 50% or more of their take home pay. They are really living in a house of cards.

Some got there by attempting to buy too much house, in the hopes that their property will appreciate. Others got sucked into the “unlock the equity in your home” pitch for new, and dangerous mortgages, like adjustable rate mortgages, no interest loans, or other products that are tenable only at the beginning of the loan.

Distressed borrowers need to step back and ask themselves why they are paying two and three times the rental value of comparable housing.

Imagine if you could put 1/3 of what you now pay on mortgage and property taxes into rent, and save or invest the balance.

Home ownership is a part of the American dream and an important element of our social and economic fabric. But it is not an object to be obtained at any price.

I often wonder how many remedial options simply delay the inevitable loss of the house. The emotional price of the struggle is high.

Too often, in the rush to find a way to keep the house, no one asks: should this house be saved?

Image courtesy of Ester Gibbons.

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Cathy Moran, Esq.

I'm a certified specialist in bankruptcy law (California State Bar Board of Legal Specialization) practicing in the San Francisco Bay Area for more than 30 years. In addition to practicing bankruptcy law, I train new practitioners at Bankruptcy Mastery.
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