When a mortgage is underwater, the homeowners owe more on the mortgage than the home is worth. If the homeowners are not struggling to pay the mortgage or do not wish to sell the home, it probably does not matter too much. However, if the homeowners cannot make the payment or wish to sell the home, then this situation presents a problem.
Mortgages typically become underwater due to changes in the real estate market over time. For example, a homeowner may have purchased the home when prices were high, expecting to be able to recoup the money used when the home is sold. However, if the market changes and prices are still down when the home is sold, the homeowners could owe significantly more on the mortgage than it is worth.
There are some options for homeowners to utilize. Homeowners could try to obtain a mortgage modification, which would allow the terms of the mortgage agreement to be changed. Homeowners could walk away and allow the house to be foreclosed on, which will have credit consequences. The homeowners could also do a short sale, which may be preferred over a foreclosure in terms of the effect on the homeowners’ credit report.
The Mortgage Modification Center
If you have questions about your options while paying your mortgage, please reach out to the Mortgage Modification Center at (401) 467-7998 for your free initial consultation. Attorney John S. Simonian has helped numerous families with their mortgage modifications, and may be able to help yours as well.