Mortgage Debt Settlement and the HOEPA

If you’re dealing with a mortgage that requires high monthly payments, and are finding your budget suffering because of it, you might be wondering if there are any relief options available to you. Most people know that if they find themselves in dire straits, it’s sometimes possible to settle a debt with the lender. Settling essentially means working out a deal with the lender, in which they are willing to accept less than the total amount in exchange for having the debt paid up. The question is whether mortgage debt settlement is a possibility on your mortgage loan or not.

Is Mortgage Debt Settlement an Option?

The answer is: it’s highly unlikely. Most debts that can be negotiated via settlements are those that are considered unsecured, meaning they are not attached to any physical possession. A mortgage, on the other hand, is a loan on your house. The odds of the lender being willing to accept less than what the house is sold for are very slim.

However, all hope isn't lost: if you find yourself struggling to make your mortgage payments, you should still consider contacting your lender. You might be surprised how many other options for relief are available to you, and your lender should have some alternatives that might work even if a settlement is not possible.

Be aware as you go into this process that, if your lender offers you a second loan in order to catch up on your mortgage payments, chances are good the loan will have a fairly high interest rate. Because you’re having trouble paying your mortgage, you’re becoming a high-risk borrower, and there will be consequences in terms of how much the loan costs you over time.

The Home Ownership and Equity Protection Act

If you do get offered a high-interest loan from your lender, you should consider it, particularly if you’re in serious trouble with your mortgage payments. It’s likely better than losing your house to foreclosure. You should also be aware that there is a law out there that is designed to protect you.

• The Home Ownership and Equity Protection Act, which was signed into law in 1994 and is known as HOEPA, relates directly to high-interest mortgage loans, and helps regulate the rules of such loans to protect the consumer from unsavory practices.
• HOEPA standardizes things like interest rates, fees, and amortization to ensure that the high interest loan isn't above and beyond reasonable terms.

Being in a situation where you can’t pay your mortgage isn't something anyone wants to face. Be aware that there are options available to you – you’re not likely to reach a settlement agreement with your mortgage lender, but there might be another answer.

Talk to an Attorney

If you find yourself having a hard time paying your mortgage, it is a good idea to get help as soon as possible. Consider contacting an experienced attorney who handles debt settlement and foreclosures. Your lawyer can assist you in exploring all your options for dealing with your mortgage and saving your home.