Last year We profiled a company that helps homeowners walk away from underwater mortgages.As we stated then (and its worse now) millions of homeowners owe more than their houses are worth.Now after millions have already lost their homes to foreclosure,the Obama administration is rolling out a program that they say will enable under water homeowners to re finance their homes The program will allow refinancing but it will do nothing about the fact that so many homeowners are in homes that are 30% or more underwater.What the program will do is only guarantee banks continue to get paid . SO who is rescued here, the banks or homeowners?
Here is where we left off last year ,with a company that you pay to get advice on how to do a “strategic default”.
The company is called You Walk Away and it is run by Jon Maddux. His answer is simple he says stop paying the bank, live rent free then walk away. Maddux says homeowners should stop feeling guilty about not paying and look at the process as a business decision. Meanwhile his firm has made him hated by bankers..
Now Suze Orman has endorsed the concept .She appeared on the View and advised that homeowners need to think seriously about stopping paying their mortgages. According to Orman, you should stick it out and continue to pay off your mortgage if your home is 10-20 percent underwater. However, if the balance on your mortgage is 20 percent greater than the value of your home or more, it isn’t worth paying off.
Here are her 3 steps
Step one should be to ask your lender to modify the loan and reduce the principal owed.
If they refuse, which they likely will, your next course of action is to ask for a short sale. If they don’t agree to that, try a deed-in-lieu of foreclosure. Still get a “No?” Orman says you should walk away at this point, and you shouldn’t feel bad about it since you asked your lender for help and they refused. YES WALK AWAY