Athen Apaquette

Wouldn’t that be nice? But no, you signed a contract called a mortgage or promissory note where you agreed to pay both interest and principal every month. If you stop you will trigger the default clauses of the note.

By not paying the mortgage, you broke that contract and therefore they can use the methods outlined your contract to get their money back which is through foreclosure and if they got shorted then they can also get a deficiency judgment against you unless it’s a purchase loan then they do not have that “recourse”.

Foreclosing means they take back the real estate property through the powers of the Deed of Trust or judicially through the courts. They can take back the collateral which is the house and sell it to pay themselves what you owe them late fees and attorney fees as well as all the filing fees. If there is anything left they have to give it to you if there is a shortage like I said they might get a judgment against you.

There are ways to get close to paying 100% of the money to the principal, if the mortgage payment is too much and a financial burden:

Chapter 13 BK which is a reorganization of your debts where the court will step in, examine your income versus debt and “cram down” the interest rate on your payments making the payment less interest and more principal. I’ve seen courts order the contract rate reduced to 2% a lot and at times 0%.

Another way is through a voluntary modification of your loan terms by your current servicer. You’ve probably heard of loan mods. This will depend if they own the debt and if you prove to them your financial strain.

If the US gets 0% mortgage like in Europe then that would be a principal only loan, but I don’t see that happening soon.

It sounds like you just want to pay down principal faster which you could do on a monthly basis or with cash. If you have another source of cash, and you don’t want to invest it in the markets then you might want to “pay yourself”  by paying off the loan on your home.

I hope this helps and please keep paying your regular payment so you preserve your credit and keep your property!

Athena Paquette

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