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Options exist for underwater distressed homeowners

In the last post, this blog recounted the story of a family that attempted to get out of financial distress on their underwater home through seeking a short sale. Statistics vary, but all sources indicate that underwater mortgages are a continuing problem for a growing number of homeowners.

There are a number of options for underwater homeowners for what steps to take if the individual homeowner is seeking relief in this tough market. Cincinnati foreclosure and bankruptcy attorneys know that there is no "one-size-fits-all" solution to an underwater mortgage. Homeowners seeking relief should consider seeking the advice and information any experienced attorney can provide before making any move.

Some homeowners who cannot make the monthly mortgage payment have chosen to move into an apartment and rent out their home to make ends meet. The idea is that the home-renter covers the mortgage and insurance payments and if the arrangement works long enough for the market and homeowner's job situations to improve, it is a win-win situation. Some downsides are potential landlord laws, costs of upkeep and tax implications. Someone considering such an idea should make the decision with competent advice.

For many distressed homeowners, bankruptcy is an appropriate option. A bankruptcy petition stops a mortgage foreclosure, and depending upon the overall financial situation, some homeowners can retain the home in bankruptcy. Others choose to surrender the home in bankruptcy and avoid any potential deficiency judgment that can follow a mortgage foreclosure.

A variety of transfer options exist in the market, ranging from short sales to negotiating a deed in lieu of foreclosure. Loan modifications and other negotiations with a lender are also an option for some.

It is important to note that none of these solutions are appropriate for every situation, making it important for homeowners struggling with mortgage payments to contact an attorney if their homes are at risk for foreclosure.

Source: WXYZ, "What to do if you're underwater on your mortgage," Ed Greenberger, Oct. 20, 2011

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