Serious advice requested: A friend just received a letter

[Flaxbee]

indicating that the bank has wiped $200,000+ off the value of their home b/c of area foreclosures, firesales, etc. This also wiped out their second mortgage, which was vitally necessary to take care of some family health care issues.

So. What the hell can they do? I haven't had to deal with the current mortgage debacle b/c we rent ... so am wondering if those DUers out there who may know more about how to handle this situation could offer some advice, some websites for research, anything. :shrug:

Thanks in advance for any help. :hi:

[Mr. Ected]

1. Flaxbee, how old is your friend or your friend's spouse?

The bank likely had the right to do what they did - it's common these days.

[Flaxbee]

2. I know; I'm sure the bank had a clause that allowed them to do this.

Home value varies, and they've gotten stuck owing more now than the house is worth because the property boom has gone bust.

They're in early to mid 50s, I think.

They also have another property they own outright they could sell, but I think they don't want to necessarily dump that $$ into their primary home because to them it feels like paying off air / nothingness, if that makes sense. And they're worried that their current home value could get slashed again, and they'd have sold this second place for no 'real' reason.

[Mr. Ected]

3. OK, if they were 62 or older I would have suggested an FHA reverse mortgage

But in this case, owning a 2nd home free and clear, I'd suggest they speak to their bank about obtaining a home equity line of credit on it, to help cover medical expenses.

[regnaD kciN]

4. When you say the bank "wiped out their second mortgage"...

...do you mean they canceled a home equity line of credit? That seems to be happening a lot these days. Otherwise, I can't see how "wiping out" a mortgage would be a bad thing -- it would imply the bank settled their debt.

[Flaxbee]

5. yes, withdrew / reduced the amount of money that had previously

been made available.

Not sure if there's anything they can do, but wishing there was some was to fix it!