Affordable mortgage: new alternative through your lawyer

According to the New York Times, some lawyers in Florida have come up with a way for them to get reimbursed for preventing foreclosures for their clients.  Here’s how it typically works:

1.  They decide that your lender has made some serious mistakes in their processing and, because of that, you have a good shot at winning either a nullification or a reduction in your first mortgage, thus reducing (or eliminating)  your monthly payments.  This could make it possible for you to stay in your home.

2. You agree on some minimum fee per month that you can afford and you sign a contingent second mortgage for 40% of that amount, less any fees you have paid and any legal fees they recover from the lender.

3.  If they succeed, the mortgage takes effect and, like any other mortgage, you make payments over time.

So, for example, if you have a $300,000 mortgage and they get it “crammed down” to $100,000, and you have paid them $5,000 in fees, you will then have a second mortgage on your house for 40% of $195,000, or $78,000.  Your total mortgage debt will have dropped from $300,000 to $178,000.

Interest rates on the second mortgage tend to be fairly low.  One Florida law firm charges only 4%.

We imagine that this idea will spread so that even if you do not live in Florida you might want to see if any lawyers in your area are willing to work like this.

If they do not succeed they get only the monthly fee you have paid them.

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