AppId is over the quota
Think America and the following comes to mind: apple pie, baseball, the great melting pot, and leveraged debt. In recent years it is the debt that has gained more recognition as American characteristic. As the thing itself, debt is not all bad. Debt allows people to invest in their future, the future of their community, and to hedge and build ideas that turn into successful innovative businesses. The dark side of debt appears when the investment fails to flourish. Today debt's dark side is most prevalently represented by the inaccurate belief that everyone should own property and real estate prices will always rise. As they say, hindsight is 20/20.
According to a November 8, 2011 CNBC article, it is estimated that as many as 50% of American home owners owe more money on their mortgage loans than their home is worth on the open market. Every time the value of your home goes down by 1, 2, or 10%, you are acquiring debt without the benefit of hedging for a future reward. There is little economic upside to paying $500,000 to own a home that is now worth only $250,000.
But what should people do if they find themselves underwater on their mortgage loan? Many people feel ashamed if they default on their mortgage loan. That sense of shame is unfortunate because it prevents the homeowners from thinking rationally about making the best financial decision. If the current trend continues, the majority of homeowners in this country will be underwater and/or facing foreclosure in the near future. When homeowners dip into their retirement plans, RIA and 401K accounts to keep from defaulting on a mortgage loan, they are compounding poor economic decisions by stealing from their future to pay for an asset that is rapidly losing value.
Deep in the American psyche is a belief that the future can always be better than the past. To support that belief, our government and markets allow people to take on debt in the form of student loans, business loans, and mortgages to invest in their future. When the investment fails, the punishment is merely a sense of shame. In 1833 the United States began a revolution of prosperity and growth by abolishing debtors prison. Dating back to the Middle Ages, the people of Europe could be imprisoned for defaulting on loans. It was not until 2008 that Greece abolished imprisonment for unpaid debts. In today's America, the only debtor's prison is a subjective one people create for themselves when the pressures of debt and loan defaults lead to mounting stress, stigma and insecurity. Such feelings are often nothing more than self-inflicted wounds. Because there is no debtors prison, every homeowner can recover and rebuild from the wound of defaulting on a mortgage loan.
If you're one of the nearly 50% of homeowners who owe more than your home is worth or are facing foreclosure, there are very tough decisions to make and an array of possible consequences and outcomes available. Every state has different laws regarding foreclosure actions which means it is essential that you meet with a knowledgeable foreclosure attorney rather than simply doing your own broad Internet research. If you are facing or potentially face foreclosure there are many options available and you must start making strategic educated decisions.
According to Zillow, residential property values fell by 63% more in 2010 than in 2009, and the dip has not stopped. Under-water homeowners are soon to be the majority, which can only mean that systematic failures share substantial responsibility in creating the foreclosure epidemic. Educated strategic decision making can save you thousands of dollars in the long run. Depending on your unique situation and the laws of your state you may be best served by fighting the bank in litigation, obtaining a loan modification, or working out a deal to simply walk away from your home and begin the rebuilding process.
Become proactive, find the right attorney to help you do the hard math and assess your personal circumstances to begin rebuilding the future. Remember, in America there is no debtor's prison.
Adam Deutsch, Esq. is an Associate Attorney at the Law Firm of Denbeaux & Denbeaux located in Westwood, NJ. The law firm specializes in consumer rights issues with expertise in foreclosure defense, predatory lending and related issues. If you are or someone you know is in need of an attorney to help defend a foreclosure or obtain a loan modification, call 201 664 8855 for more information and to schedule a free consultation.
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