Kentucky woman chooses to file for bankruptcy to save home after husband's death triggered freeze on mortgage payments — as home foreclosures surge across the country
Chicago, IL
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June 11, 2024 06:00 AM Central Daylight Time
by Serah Louis
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Carol Haynes lost her husband of 25 years in 2022 after they both fell sick from COVID-19 — and then she risked losing her home.
Haynes told Local 12 news she didn’t realize her husband’s death triggered a freeze on his bank accounts, halting the automatic mortgage payments on their home.
The bank filed for foreclosure, and even though Haynes’ step-daughter was able to negotiate a loan modification, helping to resume the mortgage payments, the bank was already in the process of selling the loan.
Haynes received a letter stating her Florence, Kentucky, home would be auctioned off on May 23. Left with few options, she decided to file for bankruptcy — despite seemingly healthy finances — which put a halt on the sale.
She hopes that displaying evidence of the loan modification in bankruptcy court will help sort everything out.
“I want to be around his things,” she said. “I can feel him here. I think if I left here, I wouldn’t live long."
Local 12 says it was unable to reach Haynes’s new mortgage holder for comment.
U.S. foreclosures are soaring
Foreclosures — which can take the form of default notices, scheduled auctions or bank repossessions — are hitting thousands of homeowners across the country.
Research from ATTOM, a property data firm, there were nearly 360,000 foreclosure filings last year — up 10% from 2022.
Additionally, while foreclosure filings slipped 4% in April compared to March, the number of completed repossessions actually climbed 8% month-over-month.
In some situations, like Haynes’s, a lack of financial planning for the future — such as creating a joint account shared with your spouse or naming a beneficiary on your bank account — can create financial troubles down the road.
But in many other cases, homeowners hit with rising property taxes and insurance bills, as well as sticky inflation, may simply be struggling to make their monthly payments.
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There are options for homeowners
In 2021, the American Rescue Plan Act set aside nearly $10 billion to support homeowners facing financial hardship due to the COVID-19 pandemic through the Homeowner Assistance Fund.
This program is designed to help homeowners manage their monthly mortgage payments, homeowner’s insurance, utility payments and other expenses, while also helping them avoid foreclosure.
And the Federal Housing Administration (FHA) just this year launched the Payment Supplement option for borrowers with FHA loans.
This option allows mortgage servicers to temporarily reduce a borrower’s mortgage payment by up to 25% for three years without changing the interest rate on the home loan. The aim of this program is to give homeowners some breathing room and time to get their finances in order so they can resume making their regular payments later on.
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