Mortgage Abandonment as Financial Strategy?

CNN recently reported about a trend emerging in real estate, specifically in the mortgage arena. As people find themselves "underwater" with mortgage loans, they are exploring all options, including "walking away" from the mortgage and the home, even if they are capable of paying the debt. Many homeowners who face negative equity as the result of the burst of the housing bubble believe they will fair better with a short term credit hit than by remaining in what has become a poor investment.

While the nature of this blog is to report trends, news and information and not to judge the merits of the information or practices on which we report, in this instance, I must address the ethical nature of this kind of practice. As with almost any purchase, there is a loss of value upon ownership. Goods, whether tools or vehicles, become "used" and are most often worth less (if you go sell them) than they cost you. Now and again, a piece of fine art or other purchase might see a gain in value. However, vehicles are a perfect example of something you purchase that loses value, especially initially. You do not "walk away" from a vehicle loan just because the car is worth less than the purchase price. While paying on a car loan, you have use of the vehicle. While paying on a mortgage, you have use of the property and home. Thus, if you can afford the payment, just because your home lost value, does not mean you should abandon it. There are extenuating circumstances that might necessitate this kind of decision, yet overall, if it is merely about whether you "want" to pay versus whether you can pay, you might want to consider the moral obligation.

Disclaimer: This blog is for informational purposes only and does not establish a client-attorney relationship. Consult with an attorney before taking action on any information found herein as individual circumstances may affect the applicability of information provided. Call The Law Office of Michael Riley at 508-405-0831 with any questions.

Purchasing a Property After Foreclosure

News reports abound about what is happening with foreclosures. Industry newsletters, title insurance companies and regular newspapers are all covering the court decisions that have been made about the "bad" foreclosures of the past two years. These foreclosures have errors in the order in which documents were recorded and the courts essentially require that the procedure be re-performed to perfect it before the title to the property is clear.

Why is this important? Well, if you're buying a home from a bank, you might assume that the title is clear and marketable. You assume the bank did everything right when it foreclosed and that if it didn't, you're protected. However, without title insurance, the problem just becomes yours to fix. When buying a home, especially out of foreclosure, you're wise to hire an attorney to represent your personal interests so that he or she examines a title in detail and makes sure you're not inheriting something that a bank did wrong. Be sure to seriously consider title insurance, as well, so that if there is something on the title, you have insurance against the cost of fixing the problem.

Disclaimer: This blog is for informational purposes only and does not establish a client-attorney relationship. Consult with an attorney before taking action on any information found herein as individual circumstances may affect the applicability of information provided. Call The Law Office of Michael Riley at 508-405-0831 with any questions.

Residential Property Values Fall 3%

While Zillow's valuations of properties are not as accurate as a bank or lender's appraisal, the valuations have helped consumers judge property worth since the company took their site online. Per a report by Zillow, the first quarter of 2011 showed home values experience the biggest drop since the real estate market plunge in 2008.

Sales prices of homes hit an all-time high in June of 2009. Since that time, values have fallen 29.5%. The only areas not experiencing this kind of pricing decline are Fort Myers, Florida, Champaign-Urbana, Illinois and Honolulu, Hawaii. Local areas vary widely as some areas have maintained values since that time.

Disclaimer: This blog is for informational purposes only and does not establish a client-attorney relationship. Consult with an attorney before taking action on any information found herein as individual circumstances may affect the applicability of information provided. Call The Law Office of Michael Riley at 508-405-0831 with any questions.

Foreclosure Inventory

DSnews.com reports that foreclosure inventory is higher than historical norms at 2.2 million loans for the end of March, 2011. New foreclosures numbered 270,681 in March, which is up over 30% from February. While these numbers increased, the number of delinquencies has decreased by 11%. Loans in foreclosure are delinquent well over a year, on average.

For the full text of the article, see the DSnews website: http://www.dsnews.com/

Statements herein are provided for information purposes only and do not represent the advice of an attorney nor establish an attorney client relationship.

Legal Documents to Consider When You Purchase a Home

In case you missed last summer's MSN Money article, "Three Documetns Everyone Needs," here is a recap. When buying a home, people consider things like paint colors for their vision of the new living room. They consider buying title insurance at the closing. Then, the mortgage comes along and not much thought is given to the attorney who handled the closing or to any other lawyer. Yet, if you purchase real estate, you likely need to make sure you have in place documents like a Health Care Proxy, a Durable Power of Attorney and a Will. You might also consider a Living Will and since real estate prompted this discussion, you might want to make sure you have a Homestead in place, as well.

Even if you completed these documents years in the past, you might wish to review them when a new home is purchased or sold. Sometimes a purchase or sale is undertaken because of a change in cirucmstances, so make sure that when you buy or sell a home, that you take the opportunity to examine your other legal documents.

For information about these documents and how they might apply to your individual situation, contact an attorney like Michael Riley.

Disclaimer: The information presented herein is offered for information purposes only and does not constitute legal advice nor does it establish an attorney/client relationship.

Welcome to the Real Estate News Blog by Michael Riley

Welcome! This blog will provide updates with news from the real estate world pertinant to residents of Massachusetts. Join and follow this blog for links to news articles relating to the purchase and sale of real estate or for information about laws that affect the purchase and sale of real estate.

DISCLAIMER: Information provided on this blog is for information purposes only. The blog does not represent legal advice nor establish any attorney-client relationship. To speak with a real estate attorney, call my office at 508-405-0831.