Second Mortgage Debt Relief Success Story: A Family Home Saved
Greg and Cynthia Brody, a young, successful couple with a great future ahead of them, had good paying jobs and planned to start their family right away. They carefully set aside money to use as a down payment on their future home and soon found the perfect house with four bedrooms, a large back yard, and in a great school district for their future kids. The hot Southern California real estate market meant that even with a decent down payment, they still had to take out a large first mortgage to make the purchase. A year later they took out a home equity line of credit (HELOC) to make improvements before the arrival of their first child.
Four years later, Greg and Cynthia had a beautiful two year-old daughter and a second child on the way. Cynthia chose to be a stay at home mom and raise their two children. They were living the American Dream. But, the loss of Cynthia’s income strained their finances and although Greg received steady pay increases, they struggled with the mortgage payments. Then, the housing bubble burst. They owed $550,000 on their first mortgage and another $90,000 on their HELOC. Their home value plummeted to $525,000. Now “under water” on their mortgage debt, continuing to make payments on the HELOC no longer made sense.
They wanted to keep their house. While exploring their options, the Brody’s discovered they could negotiate a settlement of their HELOC. They consulted with a debt settlement lawyer to see how this would work. The attorney explained to the Brodys that the mortgage lender on their HELOC would likely settle the debt for less than they owed. The bank, he explained, had limited options to collect the debt.
The debt settlement attorney estimated that the debt could be negotiated down to $31,000, which included the attorney’s fees.
The attorney worked within the Brody’s budget to develop a plan to accumulate these funds in a trust account over a period of 36 months with monthly payments of approximately $850. The attorney negotiated with the lender during this same time frame to secure the lowest possible settlement of this debt. The plan developed by the attorney included the final settlement amount, the initial lump sum down payment, and the remainder to be paid over a term. The Brodys made the monthly payments to the law firm to place in the trust account. All settlement payments were made from the money saved monthly in the trust account. By the end of 36 months, the HELOC was satisfied in full through the negotiated settlement and the Brodys with their two children remained in their dream home.
To read more debt relief success stories, visit our Client Success Stories page