Now, before I get started, let me make some things clear. I am not, and have never been, in favor of programs designed to save buried home borrowers from the consequences of their folly nor do I support any of the array of "housing affordability" programs designed to line the pockets of all the players in the housing industry while keeping house prices levitated beyond affordability for legitimate buyers. Far be it from me to lend my support to anything that would re-inflate the housing bubble or reward buyers and lenders alike for extremely bad behavior.
However, I fully support the use of foreclosure law and securities regulations as they exist to help yourself financially and hold onto your house, and your credit rating. After all, business entities don't hesitate to use every tool in the box to legally escape debts they don't want to pay, as Morgan Stanley's decision to just "walk away" from five large commercial properties in San Francisco proves. It's humorous that Morgan Stanley refuses to refer to this as a "default"- "we're not defaulting, we're giving the properties back to the bank," said one Morgan spokesman. If it's not immoral for Morgan Stanley to "give back" their underwater properties to the bank, is it immoral for home borrowers to "strategically default" on a loan that way exceeds the value of the house?
I can't think of a better way to punish irresponsible lenders, and the bottom-feeding scum "servicing" companies who have recently bought all these crud mortgages for ten cents on the dollar, or maybe twenty cents, hoping to make a quick killing off of this mountain of misery by applying strong-armed collection techniques to extract payment, then for borrowers to make use of the laws as they exist to hand it to the greedy scum who make their living off the debt creation racket.
Troubled homeowners whose mortgages date from 2003 forward might be able to use existing foreclosure laws in order to keep their homes, says Ken "The Postman" Kappel, author of Use Foreclosure Law! Save Your Home.
In a related article, Is Obama Captured-The New... New.. Mortgage Scam, Kappel states that most loan modifications are not working and have a 58% re-default rate, as they usually result in higher payments and increased loan amounts.Worse, when you get your loan modified, you mostly lose all rights you may have to remediation if your original loan was fraudulent or otherwise in violation of applicable laws and regulations.
Kappel goes on to state that, according to Forensic Loan Auditors, over 80% of mortgages written since 2003 contain predatory lending and securities law violations which the borrower could use to have the loan rendered void altogether, but that home borrowers are giving up their rights under the applicable foreclosure and securities laws when they have their loans modified.
If you are a buried borrower, it might be worth your while to explore your possibilities under existing laws to see if your rights were violated and you were indeed defrauded as that is defined under the law, and what remedies might be available to you. I make no personal guarantee that you will be able to salvage your situation, but it's worth exploring. It is especially important to carefully consider whether a mortgage modification will really serve you, even if you are able to obtain one.
Whatever you do, tread very carefully and obtain really competent legal help, before you decide to default, or get a loan mod, or take other action, for you might be able to use existing laws to save your credit rating at least, even if you end up giving up the house after all. Good luck.