Home values in the United States have plummeted 26.7 percent since peaking in 2006, according to a report released by Zillow.com. The report also sites the hardest-hit cities are Miami-Fort Lauderdale, FL; Detroit, MI; Pheonix, AZ; Riverside, CA: and Orlando, FL, each recording more than a 50% dip since 2006. Zillow estimates that 27% of all U.S. homeowners have negative equity in their property. The Zillow press release can be found here.
Some economists are predicting that the real estate market will bottom out soon and then begin a slow recovery process. Sadly, foreclosures may rise again in 2011 and reverse the negative equity statistic as people with underwater mortgages lose their homes. Nationally, about one home in every 1,000 was foreclosed on during December, 2010.
Foreclosure is a very stressful process. It is a public record and is often published in the newspaper. A foreclosure can happen rapidly and often forces the homeowner to move before ready. This can be a major disruption to family and children. Of course it impacts your credit score for years.
By filing bankruptcy, the foreclosure process can be avoided. In some cases, a Chapter 13 bankruptcy can provide the debtor time to cure an arrearage over three to five years in small payments and stop foreclosure completely. In other cases bankruptcy can strip away an entirely unsecured second mortgage, thereby freeing up money to pay the first mortgage. Lenders are also able to modify your home mortgage during bankruptcy through the federal Making Home Affordable Program.
If you are underwater and struggling to pay your home mortgage, speak with an experienced attorney and learn how the federal bankruptcy laws can help you. Whether you need to pay past-due mortgage payments, strip away a junior lien, or surrender the property and “walk away,” your bankruptcy attorney can explain the costs and benefits of each option. Call today and get the advice that can help you build a better financial future.