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'Positive equity' phenomenon could help you stop foreclosure

Many residents of Washington, D.C., are going through the foreclosure process even though they do not need to. Area residents whose homes have increased in value may no longer be "underwater" -- that is, they no longer owe more on their mortgages than the value of their home. These families were often unable to refinance or sell their homes because of their financial situations. However, foreclosure proceedings may take a significant amount of time to complete; during that time, homeowners' property may have increased in value. This could be great news for those who are interested in stopping foreclosure.

Experts say that many families may not even realize that their old home is no longer underwater, largely because they no longer live in the home and are not checking the property's value. Those who are currently going through foreclosure in the D.C. area are encouraged to double-check the value of their homes. In some cases, stopping foreclosure is an option, and homeowners are able to keep their properties simply by refinancing. Homeowners can also sell their homes through more traditional methods, which can protect their credit.

Washington, D.C., is listed among the highest metropolitan markets to be suffering from this "positive equity" foreclosure phenomenon. In our area, more than half of foreclosures are occurring on homes that have already regained some value after the recession! Nationwide, about one in three homes in foreclosure has positive equity.

Attorneys and financial advisors may be able to help homeowners identify whether their foreclosure could be halted because of this positive equity development. A lawyer could be particularly helpful for families who are going through both foreclosure and personal bankruptcy. It is wise to double-check the equity in your home before continuing with foreclosure, especially since positive equity foreclosures are so common in our area.

Source: Washington Post, "More homeowners no longer need to be in foreclosure, and they may not even know it" Dina Elboghdady, Apr. 18, 2014

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