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Hope for Under Water Homeowners Amid Next Foreclosure Wave

For those homeowners currently experiencing the pull from what the media is calling the next wave of foreclosures, feeling out of control and fearing there are few options left to save their homes is a natural response. When these people ask for and receive the right help, however, they may find there are still options available to them. Options like loan modifications, principal reductions or bankruptcy protection could take some homeowners out of the path of the foreclosure wave or allow them to ride it out until the storm passes.

People Under Water

According to real estate company Zillow Inc., around one in four homeowners in the U.S. were under water, or owed more on their mortgages than their homes were worth, at the end of 2011. Although RealtyTrac reported a decrease in foreclosures nationally in February from January of this year and from February of 2011, they increased in 21 states and spiked in cities like 53 percent in Miami and 43 percent in Chicago. Experts watching the housing market warn that local rises in foreclosures indicate signs of a national foreclosure wave.

Banks Gaining Momentum

While 2011 showed a slump in foreclosure numbers, mainly due to scandals like robo-signing where foreclosure documents were signed without review, this only temporarily slowed banks from filing new foreclosures, until recently. Banks have been gaining momentum in 2012, with foreclosure starts up 28 percent nationally in January. Certain banks had major increases in foreclosure starts in early 2012, with Deutsche Bank up 47 percent, Wells Fargo up 68 percent and Bank of America up seven times its 2011 filings.

Options for Help

While it may seem scary and daunting to reach out for help when drowning in an under-water mortgage, there are options available to suffering homeowners. Lenders may agree to loan modifications to make mortgage payments more affordable, but sometimes these payments are still too high. This has housing advocates calling for the government to allow mortgage backers like Fannie Mae and Freddie Mac to help homeowners by reducing principals prior to modifying loans. Filing for bankruptcy protection may also be an option.

Hope for Homeowners

While it is difficult to think that there are still around 9.5 million homes whose owners risk defaulting on their mortgages and possibly foreclosure, it is time to prepare for the next wave of foreclosures by searching out all available options for help. Filing for either Chapter 7 or Chapter 13 bankruptcy protection can provide hope to homeowners facing foreclosure by stopping the foreclosure process and keeping them in their homes. Bankruptcies also help people who are strapped with debt to regroup and reorganize other financial burdens.

If you are a homeowner facing foreclosure, consult a local bankruptcy attorney before giving up the struggle to fight against the pull of the foreclosure wave. A bankruptcy lawyer with experience in the foreclosure process may be able to take you out of the path of a foreclosure completely with a Chapter 7 bankruptcy or help you to ride out the wave with a Chapter 13 bankruptcy until the financial storm passes and debts are paid off.