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The bank was willing to reset her mortgage to a fixed-rate for 30 years at the current appraisal of $240,000, but pointed to the outlier short-sale of a nearby home at only $170,000 to justify requiring she pony up $25,000 in cash as collateral for the new loan. It smacked of extortion.
“What should I do?” she asked. “I feel like my back’s to the wall. I have the $25,000 but it makes me nervous to tie it up in the house. It’s most of what I have.”
“Tell them no,” I said. “If they won’t reset it without the cash, you have $25,000 to keep up your mortgage payments for three years, when the real estate market may well be recovering.”
I pointed out that even if she couldn’t make her payments, the foreclosure process is changing. Bank of America (BAC) has been offering cash walk-away payments for deeds-in-lieu to qualified homeowners, to save the time and expense of legal proceedings.
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