Bankruptcy May Help You Save Your Home

Just this week my office has had a 100% increase in initial bankruptcy calls. Potential client calls are an informal way to gauge the state of the economy and if accurate, they will indicate we are only seeing the tip of the proverbial iceberg in the housing market. As reported below, the foreclosure problem is only getting worse and consumers who are risking losing their home to foreclosure are turning to the bankruptcy courts to help them save their homes. Filing bankruptcy will stop foreclosures and allow the consumer the ability to cure arrears while they keep their home. Bankruptcy will not change your house payment but it may allow you to take care of the other bills that may make it difficult for you to pay your mortgage. Interestingly, we may soon see a scenario where mortgage companies themselves are going bankruptcy. See the below article on Fannie Mae, a government sponsored mortgage company who is essentially insolvent now. What happens when the government can't bail these upside down lenders out remains to be seen.

clipped from www.bloomberg.com ``The foreclosure problem is getting worse and will stay with us well into the next decade,'' Mark Zandi, chief economist for Moody's Economy.com in West Chester, Pennsylvania, said in an interview. ``The job market is eroding and homeowners have less equity. Lenders are much less willing to work with you if you've got negative equity, and you're more likely to give up your house if you're deeply underwater.'' clipped from www.bloomberg.com Chances are increasing that the U.S. may need to bail out Fannie Mae and the smaller Freddie Mac, former St. Louis Federal Reserve President William Poole said in an interview. Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules, he said. The fair value of Fannie Mae's assets fell 66 percent to $12.2 billion, data provided by the Washington-based company show, and may be negative next quarter, Poole said.