If you are behind on your mortgage payments, you are not alone. Many other people in the San Antonio area are too, as well as millions more nationally.
Keep in mind, as you consider your choices, that filing for bankruptcy provides an automatic stay on home foreclosure proceedings. Of course, there are also other potential options, such as seeking to get your lender to approval a short sale.
In a short sale of real estate, the proceeds from the sale come up short of meeting the amount of debt on the property, but the lenders agree to release the lien and allow the property to be sold.
Unfortunately, many lenders are reluctant to allow this. This is especially common with second liens, including the liens that come with home-equity loans.
Some real estate experts believe that holders of junior liens are holding up the recovery of the real estate market by not being more accommodating in allowing short sales.
Vicki Been, a real estate law professor in New York, describes the short sale scenario this way. “It’s an opportunity for the second-lien holder to charge a price for their cooperation, because it’s needed for a short sale,” Been said. “If they’re too greedy,” it may squelch the whole deal.”
There is ample evidence that this is indeed what is happening. Homes with second mortgages on them frequently have a resale value that is less than the balance of the mortgage debt.
Sometimes a short sale can be worked out to resolve this problem of negative equity. Don’t lose sight, however, of bankruptcy as a viable strategy to resolve delinquent mortgage payments and other debts.
Source: “Home Sales in U.S. Hostage to Holders of Junior Lens: Mortgages,” San Francisco Chronicle / Bloomberg, Prashant Gopal and John Gittelsohn, 7-23-12