Two parents and a teenager, who was diagnosed with cerebral palsy at the age of 6 months, could face losing the home the girl has lived in for most of her life. The Florida family is facing foreclosure because of a high-interest, short-term mortgage with a balloon payment that seems impossible for almost any family to pay. According to the family, such a loan should never have been approved for them in the first place.
The home was purchased by a special needs trust that the couple had obtained for their now 14-year-old daughter from a settlement that she had received. The beautiful Florida weather, along with the swimming pool and other amenities, were beneficial to the teen for her therapy. Their attorney assured them that the benefits of the home were worth the risk of the high-pressure mortgage. They purchased the house for $248,000.
What they didn’t realize at the time of purchase, however, was that the loan was extremely unusual for a low-income family like them. It was an interest-only loan, which sounded good at the time because it meant that the payments were low. Interest-only loans, however, do not pay anything toward the equity of the home. The loan had a 12 percent rate and the entire principal had to be paid off within two years, or the home could be foreclosed on.
After several loan modifications, the couple is now facing foreclosure, and their teen could lose her home and any of the money that her trust has put into it. For many like this Florida family, foreclosure is a real threat. Anyone who is in danger of losing their home to foreclosure could benefit from speaking with an experienced bankruptcy attorney. Such a lawyer can guide their client in how to file the correct paperwork to stop a foreclosure from taking place and seek long-term solutions to financial difficulties.
Source: Miami Herald, “The loan came due. Her parents couldn’t pay. Now a teen with cerebral palsy could lose her home.“, Nicholas Nehamas, April 14, 2017