Foreclosures close to record high; what you can to avoid it!

The Wall Street Journal reports that the percentage of homes in foreclosure rose to 1.28%, up from .98% a year earlier. The situation is worst among sub prime mortgage loans, of course. 14% of these loans are now 30 days or more overdue. (Less than 3% of “prime” loans are 30 days or more late.

The good news about this situation is that it has forced the mortgage holders to make deals to prevent foreclosure. According to the Journal, more and more loan servicing companies have agreed to lower interest rates or stretch out payments when loans are delinquent.

So, if your loan is more than you can bear, this is a good time to call the mortgage holder and ask for a deal. If you have an adjustable rate, maybe you can get it converted to a fixed rate at an amount you can afford. Or if your rate is so high that your payments are not within your means, ask them to lower the rate.

If your mortage is higher than the value of your house, you have an advantage with the loan company. If they foreclose and sell your house, they are going to lose big time because even though you are techically liable for any balance due after the house is sold, they know they are not likely to collect much of that.

If you are behind in your payments by a signifcant amount and have significant credit card debt, you should look at a Chapter 13 bankruptcy. That will eliminate most of your credit card debt (giving you more cash to make mortgage payments) and package up the old mortgage debt into a no-interest loan to be paid over time.

For more information on bankruptcy, click here.

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