Today, I talked to an old client who owns a condo in a rapidly declining market. Fortunately, he still has quite a bit of equity in the place, but he has an adjustable loan that resets at the end of summer. I advised him to refinance now, while fixed rates are low and before values fall any lower.
One fate he doesn't face is that of many homeowners who have little or no equity and are walking away from their loans, especially in certain areas of California, Florida and Nevada.
What these people don't realize is that their credit can be wrecked for at least five to seven years. They are also exempt from the Federal legislation enacted to protect borrowers from taxes on the principal debt forgiven by a lender (short sales)A number of web sites are out there promising to repair your credit quickly, or teach borrowers how to bail out of a mortgage without any hassle...If it sounds too good to be true, it probably is.
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