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R. Kelly joins mortgage borrowers facing foreclosure

[Jul 13, 2011.]


Singer R. Kelly is facing a $2.9 million foreclosure suit over the unpaid mortgage loan balance on his 11,140-square-foot mansion near Chicago. Kelly's mortgage woes are just another reminder that people from all walks of life are having trouble paying their mortgages in this depressed real estate market.

According to Crain's Chicago Business, Kelly stopped making the mortgage payments in an effort to force the bank to negotiate a loan modification. The home's appraised value fell 26 percent to $3.8 million in 2010 from $5.2 million the previous year, and is now worth less than the mortgage debt.

Many homeowners are underwater on mortgages

About a third of U.S. homeowners at all income levels have found themselves underwater and struggling with payments on home mortgages that are higher than what their properties are worth. Some of these borrowers will end up in foreclosure, but that doesn't mean you have to resign yourself to being one of them. Take some steps now to try and save your situation.

Get help with a troubled mortgage loan

Reach out to your mortgage lender if you are having trouble paying the bill. JPMorgan Chase and Bank of America are actually approaching troubled borrowers and quietly modifying their mortgages, according to the New York Times. The borrowers have not asked for help but are seen as being at risk of defaulting on their mortgage loans. Even if your mortgage is with a different lender, it may pay off to inquire about a modification of terms or other options that may be available to you.

Ask for a short sale

Despite being persistent, there may be little you can do to get the lender to modify your mortgage, so if you can't make the payments it may be time to consider selling. Owing more than the house is worth means you'll probably want to push for a short sale. This type of deal would allow you to sell the house for less than the mortgage balance due. Your mortgage lender and any holder of a second lien would need to agree to a short sale.

The short sale process can be long and complex. However, it could be your best option for getting rid of a troubled mortgage loan. Find a real estate agent and attorney who are familiar with the short sale process. You can't afford any mistakes along the way if you want to avoid ending up in foreclosure.


About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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