Monday, February 22, 2010

Homeowners Need to Consider Possible Legal Issues Before Deciding to 'Walk Away' from Mortgage Payment

/PRNewswire/ -- Homeowners who are considering "walking away" from their home to avoid making their mortgage payment need to know that their mortgage company may try to file a lawsuit to recover the amount owed on the home.

In addition, homeowners who sell their home for less than the amount they owe - a process called a "short sale" -- may be sued for the unpaid balance, even after the sale of the home. Finally, homeowners with unpaid home equity loans or second mortgages may also face legal action if they "walk away" from an unpaid mortgage or conclude a short sale.

"My advice is that no homeowner should ever simply 'walk away' or 'turn in the keys' without receiving a document that absolves them of all liability," said Frank Alexander, professor of law at Emory University School of Law and a member of the board of directors of Consumer Credit Counseling Service (CCCS) of Greater Atlanta.

"A borrower facing a foreclosure should assume that a post-foreclosure lawsuit is possible," said Alexander. "In addition, no homeowner should ever participate in a short sale without receiving a signed agreement clarifying that all outstanding debt has been forgiven. The same is true for all deed-in-lieu of foreclosure resolutions."

Before the current mortgage crisis, mortgage companies usually did not sue homeowners after foreclosure or short sales because many borrowers had little income and few remaining assets, according to Alexander.

But the increase in homeowners deciding to "walk away" from their homes means mortgage companies may file more lawsuits to try and recoup their losses. In addition, Alexander says that mortgage companies are often selling promissory notes for the amount owed on the mortgage, at steep discounts, to collection agencies. The collection agencies will likely pursue the former homeowner to collect the amount owed.

Because some borrowers who decide to "walk away" from their homes still have good incomes, Alexander predicts an increase in the number of lawsuits filed by mortgage companies to obtain garnishment of a homeowner's wages. "Garnishment actions are going to become quite common in late 2010 and throughout 2011 and 2012," he says.

If a homeowner involved in a foreclosure, a short sale or deed-in-lieu of foreclosure has any questions about this issue, Alexander recommends that they hire an attorney to determine if their mortgage company has any basis for legal action.

Consumer Credit Counseling Service of Greater Atlanta is one of the nation's largest nonprofit foreclosure prevention counseling agencies. In 2009, the agency provided foreclosure prevention counseling to more than 105,000 homeowners across the nation.

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Thursday, February 11, 2010

Bankrate: Mortgage Rates Mostly Lower

/PRNewswire/ -- Rates for most mortgage products retreated this week, but not the average conforming 30-year fixed mortgage, which remained at 5.15 percent, according to's weekly national survey. The average 30-year fixed mortgage has an average of 0.49 discount and origination points.

To see mortgage rates in your area, go to

The average 15-year fixed mortgage slipped to 4.52 percent and the larger jumbo 30-year fixed rate fell below the 6 percent mark, to 5.95 percent. Adjustable rate mortgages were mixed, with the average 3-year ARM declining to 4.58 percent while the 5-year ARM held at 4.56 percent.

Mortgage rates were mostly lower this week. Economic and financial market jitters continue to hold mortgage rates in check, with little movement in recent weeks. The average 30-year fixed mortgage rate, in particular, has barely budged over the past month and has settled at 5.15 percent in three of the past four weeks. Should worries about Greece and other European markets abate, both Treasury yields and mortgage rates will rebound somewhat. Mortgage rates are closely related to yields on long-term government debt.

The last time mortgage rates were above 6 percent was Nov. 2008. At that time, the average rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 5.15 percent, the monthly payment for the same size loan would be $1,092.05, a savings of $150 per month for a homeowner refinancing now.

30-year fixed: 5.15% -- unchanged from last week (avg. points: 0.44)
15-year fixed: 4.52% -- down from 4.55% last week (avg. points: 0.44)
5/1 ARM: 4.56% -- unchanged from last week (avg. points: 0.34)

Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week's move in mortgage rates, go to

The survey is complemented by Bankrate's weekly Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next week. More than half of the panelists, 53 percent, expect mortgage rates to remain more or less unchanged over the next week. A slightly lower percentage - 40 percent - predict an increase, while just 7 percent forecast a decline in mortgage rates over the same time period.

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