PREDATORY MORTGAGES WITH BALLOON PAYMENTS

 

A balloon payment is one very large payment you make at the end of the mortgage loan – typically $10,000 to $30,000. Predatory lenders like balloon payments because they can tell you that your monthly payment is low. Many times these balloon payments are “hidden” in the contract and often catch borrowers by surprise as the balloon balance is owed in full – immediately. Failure to pay it results in foreclosure.

What to do if you can’t afford your balloon mortgage payment

If you can’t afford the lump sum payment, you have three options to consider:

• Ask for an extension: Lenders may provide borrowers more time to pay back the balloon payment, so it’s worth requesting an extension.

• Refinance your mortgage: You may be able to refinance your mortgage.

• File Chapter 13 bankruptcy: In a Chapter 13, you can repay the balloon payment over 5 years and protect your home from any threatened foreclosure.

Example: $30,000 Balloon Payment

If your mortgage accelerated, leaving a $30,000 balloon payment due immediately, you can file a Chapter 13 bankruptcy to stop any threatened foreclosure and propose to pay that $30,000 balloon over 60 months with interest.

The Bottom Line

Only a Chapter 13 bankruptcy can modify the terms of the matured mortgage affording you the option of repaying a balloon payment in 5 years, and preventing any threatened foreclosure.  It’s free to chat with me about your options – you can call or text me at 215.551.7109.