How to Avoid the Next Flood of Foreclosures

Avoid Foreclosure  Arcia Law Firm

By Omar J. Arcia, Esq.
Foreclosure Defense and Bankruptcy Protection Attorney

 

Millions of Americans will soon see monthly bills shoot up on their home equity lines of credit (HELOC) taken out during the housing boom from 2005-2008, because they will convert from interest-only (no principal) to principal and interest payments at the loan’s ten year mark. HELOCS are a type of second mortgage that homeowners used to tap into the equity built up in their home. A recent analysis by Realty Trac shows that 3.3 million homes in the U.S. carry HELOCS from the 2005-08 era, and that 56% of these homes are “seriously underwater.” When these HELOCS change from interest-only to principal and interest, the monthly payments will more than double. This change will force many homeowners to default on their HELOC payments, which will lead to foreclosure of their homes. However, there are several ways to avoid this next flood of foreclosures, and to save your home.

First, you should have a qualified real estate attorney, like the attorneys at the Arcia Law Firm, closely review your HELOC for any deficiencies which prevent the lender from enforcing its terms through a foreclosure proceeding. For example, was the HELOC security agreement signed by BOTH husband and wife, and was it properly recorded in the county where the property is located?

Second, if the HELOC already “matured,” and more than five (5) years have passed without making payment, Florida law will permit you eliminate that lien from your property through a quiet title action. This means you can wipe out the loan in its entirety due to your lender “sleeping” on their rights.

Third, if you are unable to pay the increased monthly payment on your HELOC, you may be eligible to negotiate a significant reduction in the amount you owe your lender. Especially for homeowners who owe more than your home is worth, HELOC companies will not likely to recover the amount they are owed in a foreclosure. These companies prefer to negotiate a reduced payoff balance of the HELOC with the homeowner of anywhere between 10-30% of the amount actually owed. We have negotiated dozens of these reduced payoffs for clients with the balance paid within 3 months to 3 years.

Lastly, if you owe more on your first mortgage than the market value of your home, you will be able to completely wipe out your HELOC, and the lien against your home by filing a Chapter 13 bankruptcy.   In that bankruptcy proceeding you will also be able to eliminate credit card debt, medical debt, reduce or eliminate IRS debt, and even modify your first mortgage through an innovative new program available in South Florida Bankruptcy Courts.

More detailed explanations of different options available to homeowners in foreclosure, at risk of foreclosure, or considering bankruptcy are discussed in a new consumer bankruptcy seminar offered by the Arcia Law Firm in our area. Admission is free if you mention that you heard about the seminar through this magazine. Please contact the Arcia Law Firm at 954-437-9066 to make a reservation for the next seminar or to schedule your free office consultation with attorney Omar Arcia, who will personally review your case. You may also visit www.arcialawfirm.com for more information about the Firm, our staff and credentials, detailed articles, informative videos & testimonials, and to make your appointment online.

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