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Underwater: Options When Your Mortgage Is Upside Down

Book Description

Just about every month, housing values in the U.S. fall. That, in turn, increases the number of people who owe more on their houses than they are worth—either trapping them in homes they may no longer want or putting them in danger of financial catastrophe if they lose a job or are otherwise unable to meet the mortgage. Underwater: Options When Your Mortgage Is Upside Down offers valuable advice to homeowners on ways they can unload a house they no longer want, save a home from foreclosure, or undergo foreclosure and start anew. The book offers smart advice from lawyers, bankers, real estate agents, personal finance experts, and homeowners who have seen the foreclosure process firsthand, as well as those who have been able to save their homes through loan modifications and other creative methods. Those faced with tough choices will find invaluable guidance to help them make well-informed decisions while managing the emotional fallout each brings.

Many of the eleven million people in the U.S. now facing the "underwater" dilemma wonder: Is staying put the only option? What if I can't pay the monthly mortgage bill? Can I save my home? Underwater: Options When Your Mortgage Is Upside Down outlines the options—when foreclosure is a good idea, how to best protect the equity you've built up, the financial repercussions of going into foreclosure, strategies for renegotiating a loan, taking advantage of government programs designed to keep you happily housed, and more. Veteran financial journalist Chris Lauer provides the facts, ideas, and advice that can help any underwater homeowner—especially those facing foreclosure—make smart decisions for a better future.

What you'll learn

  • How to determine whether your home mortgage is "underwater."

  • How negative equity can cause long-term damage to personal budgets and the nation's economy.

  • What homeowners can do to get out from under an "upside-down" mortgage.

  • How to negotiate with your lender to refinance your loan, agree to a "short sale," or stop the foreclosure process.

  • How to protect your equity and limit your financial exposure under various options.

  • How other homeowners have been able to turn their mortgages around and rise up from dire circumstances.

  • How the choice to face foreclosure may be the right financial decision.

  • How to tap into federal programs designed to aid beleaguered homeowners.

  • How to navigate through the unfamiliar language of real estate jargon and make sense of the alphabet soup of real estate acronyms.

Who this book is for

The audience for Underwater: Options When Your Mortgage Is Upside Down consists of the millions of homeowners whose houses are either "upside-down" with their mortgages (owing more on their house than it is worth) and those who fear they may be close to that point. According to the real estate services firm CoreLogic, statistics at the end of the third quarter of 2011 show that about 10.7 million (22.1 percent) of all residential borrowers are "underwater" on their mortgage obligations. With one expert projecting a further decline of 5% in real estate values in 2012, that number will grow. These people, and those who may enter their ranks, are the audience for this book.

Table of Contents

  1. Titlepage
  2. Dedication
  3. Contents
  4. About the Author
  5. Acknowledgments
  6. Preface
    1. Hope on the Way
  7. Introduction: Underwater Homes and Upside-Down Mortgages
    1. Mary in California
    2. Robert in New Jersey
    3. Lisa and Andy in Delaware
    4. Options for Underwater Homeowners
  8. Part I: The Real Estate Market and the Underwater Mortgage
    1. Chapter 1: The Real Estate Crash
      1. When Did the Bubble Burst?
      2. Housing Market Crisis
      3. Housing Valuation
      4. Who Is to Blame for the Crash?
      5. Greenspan Was Not Alone
      6. Conclusion
    2. Chapter 2: How Bad Is the Underwater Problem?
      1. Survey Results
      2. 22 Percent of Borrowers Underwater with $689 Billion in Negative Equity
      3. Data Highlights of 2012 CoreLogic Study
      4. A Foreclosure Crisis
      5. Conclusion
  9. Part II: Expert Advice on Your Underwater Mortgage
    1. Chapter 3: Advice from an Underwater Homeowner
      1. Equity Frustration
      2. Mortgages Change Hands
      3. Trapped in an ARM
      4. Alternatives to an Appraisal
      5. Many Wait for Real Estate Market to Rise
      6. Five Strategic Steps for Underwater Homeowners
      7. Staying Financially Sound and Secure
      8. Conclusion
    2. Chapter 4: Advice from a Real Estate Attorney
      1. You’re Under Water: When to Contact a Real Estate Attorney
      2. Options for Homeowners
      3. “It’s Not the End of the World”
      4. Conclusion
    3. Chapter 5: Advice from a Real Estate Agent
      1. First Step: Pay a Visit to a Real Estate Agent
      2. Option 1: Modify Your Loan
      3. Option 2: Short Sale
      4. Option 3: Deed in Lieu of Foreclosure
      5. Option 4: Foreclosure
      6. Conclusion
    4. Chapter 6: Advice from a Mortgage Broker
      1. Regaining a Foothold
      2. Back to the Past
      3. Writing on the Wall
      4. Underwater Home Owners and HARP
      5. Streamline Your FHA Mortgage
      6. Options for Other Underwater Homeowners
      7. The Trouble with Leviathans
      8. How Mortgage Brokers Help Underwater Homeowners
      9. “Skin in the Game”
      10. Conclusion
    5. Chapter 7: Advice from a Real Estate Agent
      1. Waiting Game
      2. Post–9/11 Real Estate Boom
      3. Selling an Underwater Home
      4. Option 1: Put Money on the Table
      5. Option 2: Petition for a Short Sale
      6. How Much Should a Homebuyer Spend?
      7. Are Lenders Tougher Than Before?
      8. Take Advantage of HARP If You Qualify
      9. Conclusion
    6. Chapter 8: Advice from a Real Estate Agent
      1. Typical Scenarios
      2. Short Sale Option
      3. Everyone Is Concerned about Value
      4. Advice for the Underwater Homeowner
      5. Conclusion
    7. Chapter 9: Advice from a Mortgage Broker
      1. Benefits of Refinancing Today
      2. HARP: For Fannie Mae- and Freddie Mac-Owned Loans
      3. Hiccups Along the Way
      4. Modification: Start with Your Lender
      5. How Long Is It Going to Take?
      6. Credit Risk
      7. Conclusion
    8. Chapter 10: Advice from a Real Estate Expert
      1. Talk to Your Lender
      2. “Be There for the Long Haul”
      3. Examine Your Budget
      4. How Long Until the Recovery?
      5. Changing Attitudes
      6. New Market Rising
      7. The Keys to a Successful Short Sale
      8. Do I Need a Short Sale Facilitator?
      9. Your Credit Score
      10. To Foreclose or Not to Foreclose
      11. Deficiency Forgiveness
      12. Relocation Short Sales
      13. Short Sale Mistakes to Avoid
      14. Improved Forgiveness
      15. Conclusion
  10. Part III: The Real Estate Market: An Overview from the Experts
    1. Chapter 11: Advice from a Real Estate Economist
      1. Watching the Big Picture
      2. A Farewell to ARMs? Not Likely!
      3. Why Did Things Go So Far Off Track?
      4. Gross Overcorrection
      5. Amortization Table
      6. Who Should Consider a Short Sale
      7. What You Should Know About the Mortgage Forgiveness Debt Relief Act
      8. Conclusion
    2. Chapter 12: Advice from an Economist
      1. Ignore Sunk Costs
      2. Ethical Considerations Will Arise
      3. Ask: How Much Am I Under Water?
      4. Projecting Future Home Values
      5. Why Did Economists Fail to Sound the Alarm Before the Real Estate Bubble Burst?
      6. Ethical Dilemmas: Part Two
      7. Are More Regulations the Answer?
      8. Are Homeowners Better Citizens?
      9. Put Aside Cynicism of the Government
      10. Conclusion
    3. Chapter 13: Advice from CoreLogic Chief Economist Mark Fleming
      1. Strong Step in the Right Direction
      2. Rising Fortunes in Phoenix
      3. Negatives Lead to Positives
      4. No Jobs Slows Equity Growth
      5. Home as an Investment?
      6. Benefits of Real Estate Market Improvements
      7. Did Government Action Help?
      8. Natural Fluctuations
      9. Conclusion
  11. Part IV: Housing: Fannie, Freddie, Legal Issues, and Government Programs
    1. Chapter 14: What You Should Know About Fannie Mae and Freddie Mac
      1. Who Is Freddie Mac?
      2. Who Is Fannie Mae?
      3. How Fannie Mae and Freddie Mac Differ
      4. Fannie Mae’s Role in the Market
      5. Uncertain Future for Fannie and Freddie
    2. Chapter 15: Lenders Settle with Homeowners for $25 Billion for Abuses
      1. “Largest Joint Federal-State Settlement Ever”
      2. Banks Held Accountable
      3. Who Is Eligible for Compensation?
      4. New Mortgage Loan Servicing Standards
      5. Banks Have 3 Years to Comply
      6. “Fraudulent and Wrongful Conduct”
      7. New Servicemember Standards
      8. A Step in the Right Direction but Not an End to the Crisis
      9. Is an End to the Crisis in Sight?
      10. How Was Settlement Money Spent?
      11. Military Protections
    3. Chapter 16: Twelve Valuable Government Programs
      1. How to Prepare for a Call to a Housing Expert
      2. Twelve Programs That Can Save You
      3. Official Programs vs. Scams
      4. Beware of Foreclosure Rescue Scams!
      5. One Scam Now in Court
      6. Watch Out for These Deceptive Acts and Practices
      7. Tips to Avoid Scams
      8. What to Do if You Have Been the Victim of a Scam
  12. Part V: Appendices
    1. Appendix A: Glossary of Terms
    2. Appendix B: Additional Resources
      1. Fannie Mae
      2. Federal Bureau of Investigation (FBI): Mortgage Fraud
      3. Federal Trade Commission (FTC)
      4. Freddie Mac
      5. Hardest Hit Fund
      6. HopeNow
      7. HUD’s Housing Counseling Program
      8. Legal Information Institute (LII)
      9. Making Home Affordable (MHA) Program
      10. National Foreclosure Mitigation Counseling Program
      11. NeighborWorks America
      12. Single-Family Housing Guaranteed Rural Refinance Pilot Program
      13. Trulia
      14. U.S. Department of Housing and Urban Development
      16. Zillow’s Underwater Mortgage Resource Center
  13. Index