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| Mortgage Meltdown Misinformation Persists |
| Jennifer E. King for lawyers.com |
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As mortgage interest rates continue to climb, homes take longer to sell and housing prices stagnate or fall, most Americans are aware of recent bad news in the housing sector, according to a survey conducted in early October on behalf of Lawyers.com. But when it comes to financial concerns, people are worried about more than just the real estate market.
Nine out of 10 survey respondents say they've heard the bad news in the housing market. Specifically, 81 percent say they know people are increasingly unable to afford their mortgages, 67 percent are aware of the decline in housing prices and 63 percent have heard about bankruptcies among mortgage lenders.
Of the home owners surveyed, 42 percent say they are worried about an increase in mortgage rates and 51 percent of say they are worried about a possible decline in the value of their house. But these aren't the only financial issues of concern to everyday Americans. Seventy-three percent of all those surveyed say they are worried about health-care costs, 65 percent say they are worried about the overall state of the U.S. economy and 53 percent are worried about paying off their own debts. Fifty-five percent of those surveyed say their family may have to cut back on spending this holiday season because of increased costs due to home loans and credit card debt.
Dealing with Mortgage Problems
The effects of the "mortgage meltdown" have been felt from Main Street to Wall Street. In recent years, home buyers have increasingly turned to adjustable-rate mortgage to finance home purchases. These ARMs were originally attractive to buyers because the interest rates were low, allowing buyers to purchase more expensive homes than they'd be able to afford with a traditional fixed-rate mortgage. But as interest rates have climbed, the monthly payments on adjustable mortgages have also increased, often by hundreds or thousands of dollars a month. Those owners who can no longer afford to make their mortgage payments have been forced to choose:
- Sell their home
- Face foreclosure
- File for bankruptcy
And American home owners aren't the only ones who have suffered. The companies that hold these loans are also in crisis mode. When home owners default on their mortgages and real estate sales slow down, lenders are stuck with empty homes they can't easily sell.
Seven out of 10 home owners surveyed say they know what steps to take if they were unable to afford their mortgage. About half say they would first contact their lender, 18 percent say they would talk to an attorney and 15 percent say they would talk to a foreclosure-assistance organization. Six percent say they'd talk to a debt counselor, 2 percent would contact a new lender and 2 percent would prepare to move.
Experts advise that home owners first contact their lender, candidly describe their financial situation and attempt to negotiate a solution. An attorney or non-profit housing counseling agency can assist you in these negotiations, and may be able to suggest other options. The one thing experts all agree on: When facing foreclosure, do not move out of your house until you are legally required to do so. You have more rights while you're living in your house, and may be eligible for more types of assistance programs.
Foreclosure Misinformation Persists
Fifty-one percent of Americans surveyed believed--incorrectly--that in foreclosure the mortgage holder loses all rights to the foreclosed property, and 52 percent falsely believed that the home owner is evicted when a property goes into foreclosure. In reality, the foreclosure process can take weeks or even months to complete. During the process, a judge will set either a sale date, at which time your property will be sold at auction, or a "law date," which is the date when you will lose all rights to your home. You can regain control of your property if, at any time prior to the sale date or law date, you repay the lender, plus pay the court costs and attorney's fees. Only after the law date or sale of the property will you be forced to move from your home.
Between Oct. 5-7, 2007, a total of 1,092 U.S. adults were surveyed online by Russell Research on behalf of Lawyers.com. Lawyers.com, a division of LexisNexis, is the most comprehensive and trustworthy online resource for finding lawyers.
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