What are the ramifications for not paying your mortgage?

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What are the ramifications for not paying your mortgage?

It is getting to the point, no it is past it, where we can no longer afford our mortgage. We asked about a modification, but because we are not late with our payments, they will not do anything. We can not get a new mortgage because we owe double what our house is worth. What are our options? We live in FL.

Asked on March 2, 2011 under Real Estate Law, Florida

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You may not have any good options, unfortuately. The mortgage is essentially a contract, as you know--you are legally obligated under it. The mortgage could be changed (modified) by the *voluntary* agreement of you and the bank--but that's the kicker; they have to agree, and nothing forces them to. Since you're underwater in a bad RE market, selling is not an option.

Your best option may be to consider bankruptcy. In a Chapter 7 filing, you will have the option of giving up the house and letting the bank take it, but being off the hook for the mortgage and any remaining balance. That may give you some leverage, since you can offer to "reaffirm" the mortgage and keep paying, but only if  you get better terms--it then becomes *your* option whether to reaffirm or not, and the bank may be willing to deal. You may wish to consult with a bankrupty attorney to explore this option.


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