Avoiding a defaulted mortgage
Date: Sat, 11/15/2008 - 22:23
My wife and I have jointly owned our home since November 1996. It was a brand new home at that time. It appreciated rapidly till 2007. This year it has lost value and will likely be appraised at a value lower than the money we now owe on it.
I am currently the CEO of a medical device company I confounded in 2004 to commercialize a disposable fibre-optic-based smart needle for automatic detection of breast cancer without the need for any tissue removal. However, due to legal problems caused by one of our angel investors in 2006, I have had to take the company through a Chapter 11 reorganization. The process took about two years, and the company just emerged from the reorganization this Fall. Throughout this two-year process, the company was not in a position to pay me any salary. I supported my family during these two years by drawing down from the balance of Home Equity Line of Credit (HELOC) and through the use of credit cards. Both those resources are now gone, and we just missed our monthly payment for the HELOC for the first time this month and will be missing our mortgage payment that is due on the 17th for the first time as well.
I am currently trying the following three things to generate income…
1. Looking for consulting assignments
2. Seeking new investment capital for the newly reorganized company
3. Looking for other full-time employment
Under normal economic conditions, all three opportunities would be readily available to me, in particular possibilities 1 & 3; especially since I am a seasoned medical technology developer with over 25 years of experience developing sophisticated medical products using state-of-the art technologies and have 3 graduate degrees in highly relevant technical fields. However given the current economic climate all three choices are highly uncertain.
When we refinanced our first mortgage and got the HELOC, the respective lenders made those loans to us merely on the basis of the equity on the house using stated incomes.
We have also exhausted our 401k, IRA and the cash value on our Term Life Insurance. We literally have no other sources of any cash left. Since we will have missed payments on both our HELOC and first mortgage, we need to come up with workable solutions very quickly. Any suggestions?
I would contact both lenders for your first and second mortgages
I would contact both lenders for your first and second mortgages and explain your situation. Mortgage companies do not want your house and want to do what they can to help you keep your house.This is especially true now with all of the foreclosures and banks having problems. You might be able to work out a forebearance to delay or reduce payments or possibly move them to the back of your loan. I am 2 months behind on my mortgages (first and second) and they both basically told me I would be okay as long as I made at least one payment per month and kept in contact with them. if you cannot pay anything now they might find another solution for you to catch it up later. You should explain that this is a temporary situation and you expect to start paying soon.
Responding to the response to "Avoiding a defaulted mor
May I impose on you for a bit more information?
It would help me a lot if you could tell a bit more about your first (opening) communication on this issue with your banks. Also, I am hearing some horror stories about some banks willing to provide forbearance only in exchange for extracting agreements to let them take the mortgagee directly to foreclosure if the mortgagee runs into additional problems. Were you able to avoid anything like that? If so, what did you have to do avoid such agreements?
Thanks in advance.