CHICAGO, ILLINOIS--(Marketwired - Mar 27, 2015) -
Editors Note: There is a photo associated with this release.
Chicago bankruptcy lawyer and financial rescue expert Richard Fonfrias of the Fonfrias Law Group, LLC, (http://www.chicagomoneylawyer.com), has posted a new informational article on his website that addresses the limitations of the government's Home Affordable Refinance Program (HARP). Homeowners seeking mortgage relief should be aware that, while the HARP may sound like a good idea, the program has many of the same problems that all home loan modification programs have.
In Fonfrias' article, he cites four major problems with HARP:
- Like other loan modification programs, HARP guidelines don't fit most people, and, as a result, most people don't qualify.
- HARP will not reduce the amount owed. It does not decrease the principal balance, it makes it bigger. A larger principal balance could restrict the homeowner's ability to sell the home in the future because too much owing on the mortgage.
- Even if the loan payment amount declines due to a lower interest rate, the homeowner must continue to pay mortgage insurance at the same rate as before. If the previous loan was not insured, Fannie Mae says that the modified loan can't be insured.
- HARP will not allow a fixed-rate second mortgage or home equity loan to be paid off or refinanced.
Although the chance of success is slim, Richard Fonfrias recommends that the homeowner contact his second mortgage holder and try to persuade them to agree to remain in second position or subordinate, after the first mortgage loan is modified. "The deal gives the second lender really no incentive to co-operate, so it is highly unlikely that an agreement will be reached, but it is certainly worth giving it a try," says Fonfrias.
"I would advise anyone struggling with mortgage payments and worried about losing their home to foreclosure to consider the option of filing for bankruptcy. The first step is to speak with a bankruptcy lawyer. An experienced bankruptcy attorney will explain the benefits of filing for Chapter 13 (Reorganization) bankruptcy and how filing can protect a home from foreclosure and reduce monthly mortgage payments. The courts have the legal authority to modify a mortgage loan as part of the restructuring. With a lawyer's assistance, a homeowner can emerge from bankruptcy with an affordable modified financial plan," states Fonfrias.
"The purpose of Chapter 13 bankruptcy is to reorganize an individual's financial affairs so that their creditors get paid, and they get to keep their home and other assets. I have counseled hundreds of clients dealing with debt problems and have found most people are reluctant to file even when it is their best interest to do so. As an attorney, it is my job to provide my clients with all of the facts so that they can make an informed decision," adds Fonfrias.
About Fonfrias Law Group: Chicago bankruptcy lawyer Richard Fonfrias and his experienced legal team offer a wide range of financial legal services including tax defense, debt consolidation, foreclosure defense, bad credit repair, debt management, bankruptcy, loan and mortgage refinancing advice. Ready to assist individuals and businesses in serious financial trouble and consumers with uncontrollable debt, Richard Fonfrias invites your questions about Illinois bankruptcy, debt settlement, foreclosure, credit card debt, loans, tax liens or other financial concerns. For more information call 312-969-0730 or inquire online at http://www.chicagomoneylawyer.com.
To view the photo associated with this release, please visit the following link: http://www.marketwire.com/library/20150327-profile800.jpg.