Q: Bob, my husband is 72 and I am 69 living on Social Security with a small IRA and a small savings for emergencies. In 2006 we took out a home equity line of credit on our primary residence and used it to purchase a lot and had a home built on it as an investment, with its completion six months ago. As the market has collapsed in our area, we are left with payments on roughly $411,000. We have been using the remainder of our HELOC to continue these payments, but recently the bank lowered our line of credit and we can no longer use the HELOC. As the HELOC was used to pay the construction investment in full, our primary is now at risk. The bank has been informed of our situation but wants us to start paying from our savings and IRA. We can barely stay afloat as it is and after all these years do not want to lose everything we worked so hard for. Any and all advice from you would be greatly appreciated, Bob. Thank you very much.

Mr. & Mrs. M.

A: Mr. & Mrs. M., I am sincerely sorry for you and the large group of others out there facing this same dilemma. It’s a sad day in this country when the banks are allowed to take everything because the nation is in a recession, properties have fallen to all time lows and employment levels continue to drop. I feel for your situation as you are both in your “golden years” and should be enjoying them, not worrying about this. As I am neither a real estate attorney nor a financial advisor, I can only say that it might be time to talk to either one of these professionals. I also, in past articles, have stated that it is always very important to communicate with your lender, daily if necessary, to get things established so that there can be a difference made. Your lender can offer you options to aid in eliminating foreclosure if they are aware of all the circumstances as they pertain to you personally. Contacting their “Loss Mitigations Department” will enable you to explain your situation in full by presenting them with some of the following. You need to document your situation to the lender in the form of a “letter of hardship.” Explain to the lender the way things were for you when you started this venture and what it has become upon its completion. Indicate your ages, your physical situation; be open and honest with them to insure that they are on the same page as you are. Create a budget and get your financial status together in order to show the lender your assets compared to your liabilities. This will show them directly your financial ability to continue the current payment plan. Request that the lender restructure your current loan, drop the interest rate and lengthen the term, anything that can be done to lessen the monthly liability, yet continue to bring some monies to their table. If all this fails, ask that they allow you to give the deed to your “free and clear” property to them in the form of a “deed in lieu of foreclosure.” Giving the deed back to the lender would allow them to take the current appraised value of this new property and apply it against the balance owed on your HELOC. This done, the remaining balance would be greatly reduced, possibly making your monthly payment manageable. If this option is declined by the lender, it is an absolute must that you get this investment property listed with a Realtor and on the market a.s.a.p. Minimize your loss by selling the property as quickly as you can at a current market price, regardless of the amount, then apply the monies from its sale to the HELOC balance. In either situation, the lender could look at appraising your primary residence and “re-financing” its mortgage to include the remaining balance of the HELOC. This could roll all financed monies into a loan program that should be at a low fixed interest rate in a long term program, giving you a single low monthly payment hopefully financially manageable. Remember to keep knocking on that lender’s “Loss Mitigation” door until they adamantly deny your entire requests and then your options might need to turn to legal or financial counsel. I truly hope that there is some advice here that you can use and I wish nothing but the very best for the both of you. God bless.



Have a real estate question? Write, call, fax or e-mail:

Bob Jeffries, Realtor

Century 21 Birchwood Realty, Inc.

4040 Del Prado Blvd.

Cape Coral, FL 33904

239-540-6659 Office

239-542-7760 Fax

e-mail: bobjeffries@juno.com

Web site: c21birchwood.com