Mortgage Blog

Home Equity at Risk!

November 11th, 2014 | Short Sales, solutions for underwater properties, HECM Reverse Mortgage, foreclosure, forgiven mortgage debt

During the brunt of the recent mortgage crisis, when lenders nationwide faced unprecedented levels of mortgage loan delinquency in short periods of time, it was common to see delinquent mortgages sit with no adverse lender action.  The lenders did not have the time to focus on accelerating these loans and often let them sit with the equity cushion to protect their interest.

Today, however, the lending environment has changed again.  No longer will a lender allow a loan to pass the 120 day default mark and do nothing.  Lenders are aggressively accelerating these loans and pushing them through the foreclosure process.  This is even the case with people in default that have significant home equity.  If your lender is owed only 20% of the home value, as was recently the case with a 68 year old client of ours, all of your home equity is at risk and you shouldn’t assume otherwise. We should all be aware that you can lose it all with no legal recourse.

I bring this up because I believe it is important to be aware of the rights of lenders to protect their interests.  For a bank or a lender it is all about money and there is no emotion.  If you or someone you know is in this position you should immediately open up a dialog with the lender.  Be proactive and do whatever you need to do to keep your loan from being accelerated into foreclosure.

Alternatively, if you are older and retired and in this precarious position you can also utilize a Reverse Mortgage to buy out the delinquent or defaulted mortgage to protect your home equity and avoid further risk.  If you are not eligible for a Reverse Mortgage then it is in your best interest to communicate with your lender immediately and/or contact a realtor to sell your property before the lender legally moves to protect their interest and wipes out your hard earned home equity.

A Reverse Mortgage, a loan modification, or an outright property sale are all options to protect your home equity in the face of financial difficulties.

George H. Omilan


NMLS# 873983

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Jefferson Mortgage Group LLC

2536 Leeds Rd.
Oakton, Virginia 22124
FAX: 703-773-6946
NMLS: 935554

Located in Fairfax County, Virginia. Serving all of Virginia, Maryland & Pennsylvania. 


Jefferson Mortgage Group LLC is licensed in Virginia, Maryland & Pennsylvania.
Virginia State Corporation Commission License Number MC-5659 and the Pennsylvania Department of Banking & Securities #46259 
Maryland DLLR License #21586

An Equal Housing Lender

By refinancing the consumer's existing loan, the consumer's total finance charges may be higher over the life of the loan.

This material is not from HUD or FHA and has not been approved by HUD or any government agency.