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Question for the Money Doctors

Question submitted on Jul 26, 2013.

Question

My mortgage was through Bank of America and I am seriosly behind. They sold my mortgage to another lender and supposedly they do not work through HAMP or any of the other programs to try and refinance. Should I file bankruptcy to avoid foreclosure or lose my home with 18 years of equity?

Answer

HAMP and HARP are government programs that apply to mortgages that are owned by the federal government through Fannie Mae, etc. If your loan is owned by a private investor or the bank, then they would not fall under these programs. Also, these are known as loan modification programs and there are certain requirements that need to be met to qualify for these programs.

When your loan was administered through Bank of America, they had a lot of information on their website for people who are having a tough time paying their mortgages. I have spoken to the representatives at the bank and they can be helpful.

Now that your loan is being serviced by another lender, please go to their website and take a look at the section for people having trouble paying their mortgage. Also there is a toll-free telephone number on the statement that you can call to get some help on your options. I assume this is another lender and not a collection agency. It may be difficult when you are dealing with a collection agency since they have very little flexibility.

Unfortunately you did not provide enough information for me to give you a complete answer, but I will give you a list of questions to consider. After you think about these questions, please contact your local Consumer Credit Counseling center. You can also find help through your local United Way who can make referrals to the appropriate non-profit agencies that can help you with these loan issues.

Bankruptcy may not solve your problem. In bankruptcy you hand over control of your finances to a bankruptcy trustee who may make decisions you may disagree with. Let's not consider this as your first solution.

Here are some questions:

1. How far behind are you? Have you made any attempts at payments? Even partial payments?

2. Have you contacted the bank to explain your situation?

3. Why have you not made payments? Loss of job? Disability? Circumstances beyond your control?

4. How much equity do you have in your home? If you have been making your payments for 18 years, there should be some equity in the house.

5. Can you sell your house to pay off the mortgage? Find a place to rent?

6. Any family help? Parents, children, grandparents, etc. Depending on your situation, getting together can help solve this problem.

Doing nothing is the worst think you can do and allow a foreclosure when you have equity in the home. Please do not ignore these issues.

Good luck and I hope this works out for you.


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