Upside-Down Mortgage Lawyers
What is an “Upside Down Mortgage”?
An upside down mortgage may result when the asset that is used for securing the mortgage loan is less than the remaining balance on the loan. In a real estate setting, this is where the value of the home has gone down to the point where it is worth less than outstanding loan balance. This is also called “negative equity”, or “being underwater”, and has become somewhat common in recent years due to housing market conditions.
Having an upside down mortgage can create several unique financial challenges for a home owner. For most people, their home is the most valuable asset that they have. In a car loan or other loan, the person can sometimes use another asset to re-secure such a loan. However, with an upside down mortgage, it becomes difficult to deal with the situation because the home no longer has the same value as it once did.
What are the Causes of an Upside Down Mortgage?
Some causes of having an upside down mortgage may include:
- Overall financial mismanagement (i.e., overspending, unnecessary debt)
- Market values have decreased as a whole in a particular area
- Poor planning when selecting a mortgage payment plan
- Poor negotiation during the home purchase and sale stages
- Mortgage fraud or fraud during the real estate sales transaction
Another factor that contributes to upside-down mortgage situations is the involvement with sub-prime mortgages. With subprime mortgages, payments on the principal are significantly lower than for other loan arrangements. Thus, if the value of the home has gone down, the borrower has paid little toward the principal, which can cause difficulties if they try to sell the home.
What Should I Do if I Have an Upside Down Mortgage?
Some experts advise that a person attempt to stay in their mortgage situation if they have an upside-down mortgage. Selling the home can result not only in lost profits, but can also damage the person’s credit. If at all possible, the person should attempt to negotiate with the mortgage lender and see if they can obtain a different plan that can help alleviate some of the burden of being “underwater”.
In other cases, legal action may be necessary, especially if the upside down mortgage problems are stemming from a past incident of mortgage fraud. Each case of mortgage debt is different, and what works in one situation might not work in a different case. Professional advice is generally recommended for persons with upside-down mortgage circumstances.
Do I Need an Attorney for Help With Upside-Down Mortgage Issues?
Hiring a lawyer may be necessary in order to obtain guidance with regards to upside down mortgages. Your attorney will be able to provide you with legal advice according to the specific real estate laws that are effective in your state. Also, your attorney can provide you with expert legal representation in the even that you need to file a lawsuit over upside down mortgage issues.
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Last Modified: 06-21-2013 11:30 AM PDT
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