Thanks to the signing of the National Mortgage Settlement in February of 2012, homeowners may owe less on their mortgages than they did previously. This settlement, which came as a result of the robo-signing scandal that showed banks were rushing through the foreclosure process on many homes without bothering to pay attention to the paperwork, has provided over $20 billion in aid to homeowners so far. Homeowners are able to take advantage of this settlement by modifying their mortgages or by avoiding foreclosures with short sales. A short sale is typically better for your credit rating than losing your home to foreclosure. However, both a foreclosure and a short sale will leave you without a home. While the settlement was intended to keep people in their homes, that is not happening as often as it should.

When you try to negotiate with a bank or lender, you can get them to reduce the principal on your first mortgage, or even forgive a second mortgage. If you cannot get a second mortgage forgiven entirely, you might be able to get a reduction on that mortgage as well. The National Mortgage Settlement has required banks such as Bank of America, Wells Fargo and Citigroup to help homeowners dig out of upside down mortgages and avoid foreclosure. If you are not sure whether you would be better served negotiating with your lender or losing your home, talk to an attorney like Stephen K. Hatchey, who specializes in short sales, foreclosures and the mortgage settlement. Contact him at 813-549-0096.

This post was written by Stephen Hachey. Follow Stephen on Google, Facebook, Twitter & Linkedin.